Consumer Internet Sector Median Falls 11% as AI Risks Weigh

The consumer internet sector’s median has fallen 11% this year as investors view online aggregator platforms as potential losers in an AI-agent economy, while the S&P 500 has gained 14%.

An Oct. 12 U.S. emerging internet report outlined three potential paths for the sector in 2027: a reassessment of platform business models, faster revenue growth and stronger free cash flow.

The sector’s median valuation is 22 times projected 2027 GAAP earnings and 18 times projected 2028 earnings. The coverage universe trades at about 20 times projected 2027 earnings and 14.5 times projected 2028 earnings. Excluding DoorDash and Wayfair, the figures are 17.2 times and 14.3 times, respectively.

Earnings expectations have not been the main source of pressure. Forecast 2027 GAAP earnings per share rose 4% for the broader internet sector and 8% across the coverage universe. The valuation decline has instead centered on long-term value as AI agents are viewed as a threat to online aggregators.

The first potential path is a shift in views on platform business models. Autonomous driving is a key variable for Uber, with autonomous vehicles accounting for about 1% of the U.S. taxi market. Waymo is leading the expansion of autonomous fleets, which could grow from thousands to tens of thousands in coming years.

DoorDash faces less severe AI-agent concerns but remains exposed to disintermediation and margin pressure. Membership lock-in, rapid-logistics scale and real-time inventory could support the platform as consumer behavior changes. DoorDash, Uber and Instacart have introduced conversational commerce tools, including Ask DoorDash and Text DoorDash.

The second path is revenue acceleration. Wayfair’s 2027 revenue growth could reach about 10%, supported by category stability, its Rewards program, store expansion and improvements to core products. Advances in artificial intelligence and machine learning could improve online experiences across market platforms.

The third path is stronger free cash flow and higher margins. 2027 profit margins are expected to be a focus for DoorDash and eBay. eBay also faces attention on growth and advertising revenue, while Uber faces debate over autonomous-driving investment and its acquisition strategy.

DoorDash, Uber, Instacart and Wayfair received outperform ratings, while the rest of the coverage universe received market-perform ratings. Their price targets were $270 for DoorDash, $195 for Uber, $60 for Instacart and $125 for Wayfair.