CICC Predicts 2025 Internet Sector Earnings Reversal, 6-12 Months Positive Outlook

CICC, a leading securities firm, has maintained a positive outlook on the U.S. internet sector for the next 6 to 12 months. The firm's latest research report, which examined the first-quarter earnings and second-quarter outlook of major internet companies, underscored the sector's robust performance. The report suggested that internet companies are likely to sustain strong earnings in the first half of 2025, with potential adjustments in the second half due to fluctuations in tariff policies. However, the report indicated that the most adverse scenarios have already materialized.

In the short term, sectors such as streaming, gaming, and local services, which are less impacted by tariffs, are considered safe havens. If tariff negotiations continue to improve, cyclical sectors like online advertising, e-commerce, and consumer finance could experience a reversal in their earnings expectations. This shift could present significant investment opportunities in the coming months.

CICC's recommendations for the internet sector include three categories: 1) aggressive choices that benefit from tariff and policy reversals, 2) defensive choices for the medium term, and 3) potential targets for deregulation. The firm's positive outlook is grounded in current earnings expectations and valuation levels, suggesting that the internet sector's earnings reversal could present significant investment opportunities in the coming months.

The report highlighted that the internet sector's resilience is evident from the first-quarter earnings and second-quarter outlook of leading companies. The sector's ability to maintain strong performance despite potential policy changes underscores its robustness. The report also noted that while the second half of 2025 may see adjustments due to tariff policies, the overall outlook remains positive.

CICC's recommendations provide a clear roadmap for investors looking to capitalize on the internet sector's potential. By focusing on sectors less affected by tariffs and those poised to benefit from policy changes, investors can position themselves to take advantage of the sector's growth. The firm's analysis suggests that the internet sector's earnings reversal could present significant investment opportunities in the coming months, making it an attractive option for investors.