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 and ongoing war in the Middle East are adding fuel to the fire, threatening to further squeeze both consumers and businesses. Tariffs, war, 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. 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, Inc. (GDDY Quick QuoteGDDY - Free Report) , Vipshop Holdings Limited (VIPS Quick QuoteVIPS - Free Report) and Asure Software, Inc. (ASUR Quick QuoteASUR - 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 #227, which places it among the bottom 8% 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 2.5% over the past 12 months.

Earnings 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 45.7% during this period, while the S&P 500 and the broader sector have risen 26.8% and 43.6%, respectively.

One-Year Price Performance

Industry's Current Valuation

Based on the forward 12-month price-to-sales (P/S), a commonly used multiple for valuing Internet-Delivery stocks, the industry is currently trading at 0.87X compared with the S&P 500’s 5.10X and the sector’s 6.59X.

Over the past five years, the industry has traded as high as 2.03X and as low as 0.66X and recorded a median of 1.00X, as the charts below show.

Forward 12-Month Price-to-Sales Ratio (Industry vs. S&P 500)

 

Forward 12-Month Price-to-Sales 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.

GoDaddy is seeing steady demand for its integrated platform as customers adopt higher-value bundles and AI-led tools that simplify getting online. Applications & Commerce continues to outgrow the Core Platform, while disciplined execution and internal AI adoption are supporting margin expansion and cash generation. Airo AI Builder and Airo Care are early proof points that can deepen engagement, and ANS partnerships extend GoDaddy’s role in digital identity.

The Zacks Consensus Estimate for 2026 earnings has been revised upward by 11 cents to $7.17 per share over the past 60 days.

Price and Consensus: GDDY

 

Vipshop Holdings: It is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website. It currently carries a Zacks Rank #3.

Vipshop Holdings’ continued efforts to strengthen product offerings and improve product procurement are aiding its financial performance, given the growing proliferation of online shopping. The solid execution of its merchandising strategy is bolstering its active customer base. Vipshop Holdings’ quarterly results are likely to keep benefiting from its deepening focus on high-margin-generating apparel-related businesses, especially the discount apparel business. The company’s deep discount channels are expected to bolster its online gross merchandise volumes in the quarters ahead.

The Zacks Consensus Estimate for current-year earnings has been revised upward by 5 cents to $2.66 per share over the past 30 days.

Price and Consensus: VIPS

 

Asure Software: This is a cloud computing firm that offers business clients the chance to modernize their human capital management (HCM), time and attendance solutions, and payroll and taxes. Asure Software’s strategic initiative to become a pure software-as-a-service HCM company is aiding its top-line growth.  This Zacks Rank #3 company’s focus on driving innovation for its HCM solutions is helping it expand its footprint in the HCM market.

New client additions and a continued focus on cross-selling to existing clients are driving Asure Software’s revenues. The company’s differentiated employee strategy, measurement capabilities and comprehensive product offerings are helping it win new customers.

The Zacks Consensus Estimate for Asure Software’s 2026 earnings has been revised upward by a penny to 87 cents per share in the past 60 days.

Price and Consensus: ASUR