Assessing Mahaney's 2026 Internet Picks: A Scalability and TAM Framework

The investment thesis for these three picks is built on a simple, powerful filter: scalability and the capture of Total Addressable Market (TAM). In a market where growth is increasingly concentrated, the winners are those with the operational leverage to expand profitably and the market reach to dominate. This framework separates Amazon's cloud leadership from Expedia's turnaround and Zillow's long-term housing play.

Amazon exemplifies scalable dominance. Its cloud unit, AWS, grew 20% year-over-year in the third quarter, its fastest pace in 11 quarters. This isn't just growth; it's margin expansion driven by generative AI adoption. The unit's operating income rose 9% to $11.4 billion, accounting for about two-thirds of Amazon's total profit. This performance has flipped the AI narrative positive for the stock, with analysts predicting a 25% annual rise in profits per share over the next two years. The TAM here is global enterprise computing, and AWS's scale and recent investments, like its new $11 billion AI data center, are designed to capture more of it, even against fierce competition from Microsoft and Google.

Expedia represents a classic turnaround story where TAM is being re-acquired. The company trades at a price-to-sales multiple of only 2.57, a steep discount to its peers. Yet, under new management, it is streamlining its platform and improving the customer experience-changes that are not yet reflected in the valuation. The thesis is that Expedia can regain market share in the travel booking TAM, which has shown signs of operational improvement. The discount provides a margin of safety for investors betting on execution.

Zillow is a long-term play on TAM stabilization. Its stock has pulled back roughly 25% since September, creating a potential entry point. The catalyst is a housing market normalization. As affordability challenges drive more consumers online for listings and rentals, Zillow's digital platform is positioned to capture that demand. The TAM here is the entire U.S. housing transaction ecosystem, and the recent pullback may have priced in too much pessimism about a slow recovery.

The bottom line is that scalability is the engine, and TAM capture is the destination. Amazon is scaling its core business with AI; Expedia is scaling back into its market; Zillow is scaling into a recovering one. Each story is distinct, but all hinge on the ability to grow profitably within a defined market.

Scalability Analysis: TAM, Market Share, and Growth Levers

The scalability of a business is ultimately determined by the size of its addressable market and its ability to capture it. For the three companies under review, the path to growth is defined by distinct TAMs and market positions. Amazon's AWS leads a vast, accelerating cloud market, Expedia operates in a high-growth travel booking ecosystem, and Zillow dominates a digital real estate portal with a massive user base. Each faces different constraints and opportunities in scaling its model.

Amazon's cloud arm, AWS, sits at the epicenter of a market that is both enormous and expanding rapidly. The global cloud infrastructure services market reached $99 billion in revenue in the second quarter of 2025, growing at a robust 25% year-over-year. AWS commands a commanding 30% global market share, a lead that provides a massive TAM for its AI-driven expansion. The company's scale is evident in its ability to generate over $36 billion in additional revenue since early 2023, with GenAI-specific cloud services growing 140-180% in the latest quarter. This isn't just incremental growth; it's a re-acceleration of the entire market's trajectory. For AWS, the scalability question is less about finding a market and more about maintaining its lead against a competitive field that includes Microsoft Azure and Google Cloud, which together control 63% of the market. The TAM is clear, and AWS's position is strong, but the pressure to innovate and capture AI's full economic value is intense.

Expedia's scalability is measured in bookings and operational execution. The company demonstrated its ability to scale its core travel platform with gross bookings increasing 12% year-over-year to $30.7 billion in the third quarter. This growth is not a one-off; management has provided a clear forward view, targeting 6-8% Q4 growth and full-year gross bookings of approximately 7%. This consistency signals a highly scalable business model, where demand generation and platform efficiency are working in tandem. The company's focus on AI for operational efficiency further suggests a path to margin expansion as it scales. The TAM here is the global travel market, which has shown resilience and recovery. Expedia's challenge is not market size, but execution-continuously outperforming expectations and leveraging technology to drive both top-line growth and profitability.

Zillow's scalability is rooted in its unparalleled digital reach and its forecast for a rebounding housing market. The platform captures over 50% of U.S. real estate portal visits and boasts 227 million monthly unique users, creating a vast, engaged audience. This user base is the foundation for monetizing the housing transaction. The TAM is defined by the number of existing home sales, which Zillow forecasts will climb to 4.26 million in 2026, a 4.3% increase from 2025. This forecast hinges on improving affordability, a trend Zillow expects to drive pent-up demand. For Zillow, scalability means converting its massive traffic into transaction volume and revenue, particularly in a market where its platform is the default starting point for millions. The company's growth lever is its data and user network, which create a powerful flywheel: more users attract more listings, which attracts more users, and so on.

In each case, the TAM is substantial. AWS's market is growing at a blistering pace, Expedia's bookings are scaling with clear guidance, and Zillow's user base is positioned to capture a rising tide of home sales. The real test for scalability is execution: AWS must defend its lead in an AI-driven market, Expedia must consistently hit its growth targets, and Zillow must convert its digital dominance into transactional success. The numbers suggest the potential is there; the path forward will be defined by how well each company navigates its specific growth levers.

Financial Impact and Valuation: Pricing Growth and Risk

The market is now pricing growth and risk with a fine-toothed comb. For a company like Amazon, the premium valuation reflects a bet on scalable leadership. Its forward P/E of 35.2 and EV/Sales of 3.5 suggest investors are paying up for its cloud dominance. Yet the growth catalysts are tangible. Evercore ISI projects a 25% annual rise in profits per share, driven by AWS's fastest growth in over a decade and a suite of AI and operational initiatives. The risk is that this premium pricing leaves little room for error; any stumble in the cloud narrative or a slowdown in its other ventures could pressure the multiple.

For turnaround stories, the valuation gap is the opportunity. Expedia exemplifies this dynamic. Its stock has outperformed in 2025 with a year-to-date surge of more than 54%, yet it trades at a low P/S multiple compared to peers. The recent earnings beat, with gross bookings up 12% and adjusted EBITDA margin expanding to 33%, shows the operational engine is firing. The market may still be underestimating the scalability of its AI-driven efficiency gains and international recovery. A re-rating is likely if this momentum continues, as the current multiple does not fully reflect the margin expansion potential.

Then there is Zillow, where the valuation is high but the growth thesis is anchored in a clear path to normalization. Its P/S ratio of 7.4x is elevated, but management has set ambitious targets: mid-teens revenue growth and a path to 45% EBITDA margins in a healthy housing market. The recent pullback has set up a long-term opportunity, with analysts projecting a median upside of 24.3%. The risk-adjusted return hinges on the company's ability to execute its integrated transaction strategy and scale its rental and mortgage segments, which are already accelerating.

The bottom line is that current valuations are a direct function of perceived scalability and risk. Amazon's premium is a bet on sustained cloud leadership and execution. Expedia's low multiple is a discount on a turnaround that is gaining traction. Zillow's high multiple demands a successful navigation of a cyclical housing market. In each case, the market is pricing the future growth trajectory, leaving investors to weigh the catalysts against the embedded expectations.

Catalysts, Risks, and the Growth Investor's Framework

The investment thesis for these companies hinges on validating their scalability and tapping into their vast total addressable markets (TAM). The near-term catalysts are clear, but they are met with tangible risks that could derail the growth narrative. For investors, the path forward requires monitoring specific operational signals that will confirm or challenge the underlying assumptions.

The most direct catalyst is Amazon Web Services' continued dominance in the AI cloud race. AWS's ability to capture a growing share of AI workloads is critical for its long-term TAM expansion. The company's recent performance shows it is well-positioned, with revenue growing 16% year-over-year in its latest quarter. The key validation signal for investors will be the quarterly AWS growth rate, particularly the segment's contribution to overall revenue. A sustained acceleration here would confirm that AWS is not just a cloud provider but the primary infrastructure layer for the next wave of enterprise AI, directly supporting its multi-trillion-dollar TAM thesis.

In travel, Expedia's turnaround is gaining momentum, with its Q4 guidance providing a near-term growth catalyst. The company anticipates Q4 gross bookings and revenue growth between 6-8%, a target it has consistently met or exceeded. This performance is being driven by a dual engine: strong B2C demand and a strategic push to scale its B2B segment. Investors should monitor the progress of this B2B integration, as it is key to expanding Expedia's TAM beyond direct consumers. The company's heavy investment in AI, including partnerships with OpenAI, is aimed at creating a step-function improvement in efficiency and personalization, which must translate into higher customer lifetime value and market share to justify its premium valuation.

For housing, the catalyst is a macroeconomic rebound that Zillow's forecast suggests is taking shape. The company projects 4.26 million existing home sales in 2026, a 4.3% increase from 2025. This uptick in transaction volume is the fundamental driver for Zillow's core for-sale revenue. The company's own financials show the early signs of this trend, with residential revenue growing 7% year-over-year last quarter. The validation signal here is multifaceted: investors must watch Zillow's rental and mortgage segment performance, as these are the high-growth, high-margin parts of its integrated platform. The company's forecast for a billion-dollar revenue opportunity in rentals and its rapid adoption of tools like AI-powered virtual staging are attempts to capture more value from each transaction, directly linking to its scalability thesis.

Yet these catalysts face significant headwinds. The primary competitive risk is intense pressure in the cloud market, where AWS must defend its lead against Microsoft Azure and Google Cloud Platform. Any erosion in AWS's market share or pricing power would directly threaten its growth trajectory and TAM. In travel and housing, the macroeconomic sensitivity is a persistent risk. Expedia's guidance assumes a stable demand environment, but a sharper-than-expected economic slowdown could quickly dampen discretionary travel spending. Similarly, Zillow's sales forecast is predicated on improving affordability; if mortgage rates remain stubbornly high or unemployment rises, the pent-up demand could fail to materialize.

The execution risk for Expedia is particularly acute. The company is in the midst of a major strategic pivot, integrating AI and scaling its B2B business. The success of this turnaround depends on flawless execution. Any misstep in technology integration or partner management could slow growth and undermine the confidence that has driven its recent stock performance. For all three companies, the framework for investment is clear: watch the quarterly numbers for AWS, the B2B and AI progress for Expedia, and the rental/mortgage metrics for Zillow. These are the signals that will determine whether the near-term catalysts are enough to validate the long-term scalability and TAM theses.