The Zacks Internet - Delivery Services industry is navigating choppy waters, with macroeconomic uncertainty, inflationary pressure and persistently high interest rates clouding the near-term outlook. Tariffs are adding fuel to the fire, threatening to further squeeze both consumers and businesses. Tariffs, inflation, and high interest rates could hurt discretionary and enterprise spending, leaving companies in the Internet – Delivery Services space bracing for softer demand in the quarters ahead.

Moreover, aggressive hiring and heavy investments in sales and marketing — necessary to stay competitive — are driving up costs. Expanding into new markets may offer long-term rewards, but the near-term impact on margins from high upfront costs is hard to ignore.

Despite these challenges, industry participants like GoDaddy (GDDY Quick QuoteGDDY - Free Report) , MakeMyTrip (MMYT Quick QuoteMMYT - Free Report) and QuinStreet (QNST Quick QuoteQNST - Free Report) are strategically positioned for growth due to their sustained efforts toward adopting changing consumer preferences. A greater Internet presence in emerging markets, a burgeoning affluent middle class and the accelerated uptake of smartphones are set to aid the Internet – Delivery Services industry participants. Online delivery is yet to expand beyond major metros, underlining lower penetration and significant room for growth.

Industry Description

The Zacks Internet - Delivery Services industry primarily comprises companies that offer services via Internet-based platforms. These include food delivery, online travel booking, direct marketing, media services and web hosting, among others. Some companies in this space offer Internet domain registration and web hosting registration, and sell e-business-related software and services. A few industry participants provide air and train ticket bookings, customized holiday packages, hotel bookings, bus tickets and car hire services. Some players offer online direct marketing and media services, including online messaging, email broadcasting, search engine marketing and brand management facilities. Growth-stage companies in the industry are spending more on R&D and sales & marketing, making it difficult for them to generate profits in the near term.

Trends Shaping the Future of the Internet - Delivery Services Industry

Smartphones and Internet Penetration Fuel Growth: The relentless rise in smartphone usage and better Internet access are reshaping the delivery services landscape. Whether it's ordering dinner, booking a trip or managing HR software from a mobile app, the digital shift is unlocking massive opportunities. Companies in the Zacks Internet – Delivery Services industry are riding on this wave, with 4G adoption already widespread and 5G now emerging as a game-changer, bringing faster connections and more seamless user experiences. The broader and deeper this connectivity runs, the more scalable and efficient these businesses become.

Shifting Consumer Preferences: The shift in consumer preferences, driven by convenience and easy accessibility, is anticipated to aid the industry. The accelerated transition from offline to online food ordering, along with the rising penetration of online travel booking, augurs well for industry players. However, as a higher consumer spending appetite is the main driver behind the overall industry’s health, any sluggishness in the global economy will pose a risk.

Tech Innovations Provide the Industry With an Edge: Advances in technology, including smart routing algorithms, real-time GPS tracking, and predictive delivery models, are making the customer experience faster, more reliable and transparent. These innovations are reducing delivery times, minimizing inefficiencies, and giving early adopters a competitive edge in a highly dynamic market.

Tariff War Risks: Although these companies don’t directly import goods, the fallout from a tariff war can still hit them hard. When tariffs drive up prices, small businesses pull back, new startups pause their launches and enterprise clients grow cautious. That ripple effect is evident from weaker advertising spending, fewer domain registrations or slower demand for digital tools. So, while the impact may be indirect, it is real and could weigh on revenue growth and margins if trade tensions continue to escalate.

Higher Upfront Costs to Hurt Profitability: Online delivery is yet to expand beyond major metropolitan areas, underscoring lower penetration and significant room for growth. However, higher upfront costs associated with expansion strategies may erode profitability. Intensifying competition from big tech giants is another challenge for industry participants. Amazon continues to strengthen its delivery capabilities, while Alphabet is expanding into food delivery through projects like Wing and its suite of apps. These tech giants bring deep pockets, vast infrastructure, and enormous user bases, raising the bar for the entire industry. For smaller players, the pressure to scale quickly while defending their market share has become a high-stakes balancing act.

Zacks Industry Rank Indicates Dull Prospects

The Internet - Delivery Services industry is housed within the broader Computer and Technology sector. It carries a Zacks Industry Rank #201, which places it among the bottom 17% of nearly 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative aggregate earnings outlook for the constituent companies. The industry’s earnings estimate for 2026 has moved down 18.3% over the past 12 months.

Estimate Revision for 2026

Let’s look at the industry’s performance and current valuation.

Industry Underperforms S&P 500 and Sector

The Zacks Internet-Delivery industry has underperformed the S&P 500 composite and the broader Zacks Computer and Technology sector over the past year.

The industry has plunged 24.5% during this period, while the S&P 500 and the broader sector have risen 15.1% and 19.6%, respectively.

One-Year Price Performance

Industry's Current Valuation

On the basis of forward 12-month price-to-sales (P/S), a commonly used multiple for valuing Internet-Delivery stocks, the industry is currently trading at 1.41X compared with the S&P 500’s 5.18X and the sector’s 6.37X.

Over the past five years, the industry has traded as high as 2.03X, as low as 0.66X, and recorded a median of 1.12X, as evident in the charts below.

Forward 12-Month P/S Ratio (Industry vs. S&P 500)

 

Forward 12-Month P/S Ratio (Industry vs. Sector)

3 Stocks to Watch

GoDaddy: It is an Internet domain registrar and web hosting company that also sells e-business-related software and services. This Zacks Rank #3 (Hold) company designs and develops cloud-based technology products for small businesses, web design professionals and individuals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GoDaddy is benefiting from strong momentum across the Applications & Commerce business and expanding its global footprint. Growth in bookings, primarily driven by strong customer additions and price increases in various domains, has been a key catalyst. GDDY’s focus on pricing, bundling and cost optimization, along with innovation in commerce and seamless user experiences, ensures continued momentum. It is also expanding its commerce offerings, seeing significant growth in gross payment volume.

The Zacks Consensus Estimate for 2026 earnings has been revised downward by 2 cents to $7.11 per share over the past 60 days.

Price and Consensus: GDDY

 

MakeMyTrip: It is an online travel service company that offers travel products and solutions in India and the United States. The company's services and products include air tickets, customized holiday packages, hotel booking, railway tickets, bus tickets and car hire. It also facilitates access to travel insurance.

MakeMyTrip is capitalizing on India's booming travel and tourism industry. MMYT is the leading online travel agency in India with a dominant market share of more than 50%. The company is well-positioned to benefit from the country's economic upswing and expanding middle class. The company's resilience, strategic acquisitions, and significant investment in cutting-edge technology and a user-friendly platform have solidified its market leadership.

Globally, MakeMyTrip is gaining substantially from improving travel conditions. Growing hotel demand as a result of the rise in short-stay getaway vacations, great travel deals and hygienically safe properties is a major upside. The company is also optimistic about its cost-control initiatives, the MySafety and GoSafe programs, and the strengthening of its hotel business.

MMYT stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for fiscal 2026 earnings has been revised downward by 25% to $1.62 per share in the past 60 days.

Price and Consensus: MMYT

QuinStreet: A provider of online direct marketing and media services, QuinStreet offers online messaging, email broadcasting, search engine marketing and brand management services.

QuinStreet is benefiting from the accelerated shift from an offline to an online business model across industries. Ad spending is likely to continue increasing, driven by improving business activities. The company is well-positioned to bank on this opportunity, and acquire new customers and high-value deals.

QuinStreet carries a Zacks Rank #3 at present. The Zacks Consensus Estimate for fiscal 2026 earnings has been revised upward by 2 cents to $1.09 per share in the past 60 days.

Price and Consensus: QNST