Third-quarter 2026 is expected to have extended the artificial intelligence investment cycle that has become the defining catalyst for Internet stocks, with cloud demand, AI-enhanced advertising and agentic commerce likely shaping results more than any single headline metric. Across July, August and September, the industry’s central test was whether record infrastructure spending was converting into visible, durable revenue growth.

Drawing on our proprietary research and market insight, we’ve identified four Internet stocks — Yelp (YELP Quick QuoteYELP - Free Report) , Shopify (SHOP Quick QuoteSHOP - Free Report) , CoreWeave Inc. (CRWV Quick QuoteCRWV - Free Report) and DigitalOcean (DOCN Quick QuoteDOCN - Free Report) — that appear well-positioned to beat earnings estimates this season.

AI Capex and Cloud Momentum

Capital expenditure is expected to have remained the industry’s defining theme. The four largest Internet spenders collectively spent roughly $203 billion on capex in the third quarter, with servers, custom AI chips, data centers and power capacity absorbing the bulk of investment as compute demand continued outpacing supply. That spending appears to be paying off at the top line. Google Cloud revenues surged 103% to $30.7 billion, Microsoft’s Azure grew 48% as commercial remaining performance obligation jumped 73% to $677 billion, and AWS revenues rose 39% to $46 billion, signaling multiyear enterprise commitments to AI workloads. Several companies tightened or lifted full-year capex outlooks, underscoring that the investment cycle has yet to peak. Rising token volumes and AI agent deployments are expected to have lifted utilization industry-wide, benefiting software, data and cybersecurity platforms built atop cloud infrastructure.

Digital Advertising and Agentic Commerce

Advertising is expected to have remained the industry’s most dependable revenue engine. AI-driven ad ranking, recommendation systems and automated campaign tools are likely to have improved targeting and conversion, supporting higher ad pricing and impression growth across social media, search and retail media platforms. Google Search & other revenues rose 12% on five-year-high query growth, while Amazon expects fourth-quarter advertising growth in the high teens and net sales of $240-$247 billion. Agentic commerce gained traction through the quarter, as AI assistants increasingly handled product discovery and transactions, prompting e-commerce marketplaces, payment providers and merchants to integrate with emerging agent protocols. Consumer AI engagement also deepened, with leading assistants reaching hundreds of millions of users and opening new subscription and monetization avenues.

Key Headwinds

The quarter, however, was not without strain. Heavy infrastructure outlays are expected to have pressured free cash flow, with several large Internet companies reporting negative quarterly free cash flow as capex outpaced operating cash generation. Rising depreciation, higher energy costs and elevated AI research spending are likely to have weighed on margins, particularly for companies whose AI monetization remains early. Legal and regulatory exposure intensified, as youth-safety litigation produced multibillion-dollar settlements, while antitrust and privacy scrutiny continued in the United States and Europe. Advertising growth was also uneven, with event-timing shifts and softer video ad trends tempering gains at some platforms. Smaller Internet players faced a widening competitive gap, as compute access favored the largest balance sheets. Investor sentiment consequently stayed highly selective, rewarding visible AI revenues while penalizing spending without matching returns.

Taken together, the third quarter suggested the Internet industry is moving from AI ambition toward measurable monetization, with cloud backlogs, ad pricing and agentic adoption validating the infrastructure bet. Yet cash-flow pressure, legal costs and regulatory risks remain real concerns. Internet stocks appear positioned for fourth-quarter momentum, provided capex keeps converting into durable, profitable revenue growth.

How to Make the Right Pick?

With the presence of several industry participants, finding the right software stocks with the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes this task fairly simple.

You could narrow down your choices by looking at stocks that have the perfect combination of two key elements — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. 
 
Earnings ESP is our proprietary methodology for determining stocks that have the maximum chances of beating estimates in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
 
Our research shows that for stocks with this favorable mix of ingredients, the odds of a positive earnings surprise are as high as 70%.

Best Bets

Given below are four Internet stocks that have the favorable combination to beat on earnings this reporting cycle:

Yelp guided third-quarter 2026 revenues to $365-$370 million and adjusted EBITDA to $70-$75 million. Strained local-business advertising budgets are likely to have weighed on revenues, while higher AI, Hatch and marketing spending is expected to have squeezed margins. Services is likely to have gained from leads routed to multi-location advertisers and from Yelp Assistant, which drove about 10% of second-quarter Request-a-Quote projects. Restaurants, Retail & Other is likely to have stayed soft amid food-delivery competition, though Yelp Host crossed one million calls in July and added OpenTable and commission-free pickup ordering. Other revenues, up 98% in the second quarter, are expected to have stayed strong. In August, Yelp disclosed that a Hatch test integration generated 1,000-plus leads, and in September, it added OpenAI’s GPT-Live-1 to Hatch and Yelp Host. Capex, up 13% last quarter, is likely to have stayed elevated, while buybacks were paused to repay the $100-million revolver.

The Zacks Consensus Estimate for third-quarter earnings has moved south by a penny to 43 cents per share in the past 30 days. The company currently has an Earnings ESP of +12.5% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shopify is set to report third-quarter 2026 results on Nov. 3. SHOP expects revenues to grow at a low-thirties percentage rate year over year, while gross profit is projected to rise at a mid-to-high twenties percentage rate. Merchant Solutions is likely to have benefited from robust GMV momentum and deeper Shopify Payments adoption. In July, Shopify rolled out POS versions 11.10 and 11.11, adding cart sharing and faster cash payments, aiding offline traction. In August, Shop Pay Installments launched in Australia. Subscription Solutions is anticipated to have gained from merchant additions, building on second-quarter Monthly Recurring Revenue of $221 million. However, a payments-heavy mix is expected to have weighed on gross margin, while elevated transaction and loan losses remain a concern. Operating expenses are projected at 33-34% of revenue. Minimal capex is likely to have supported a free cash flow margin guided in the high-teens to low-twenties.

The Zacks Consensus Estimate for third-quarter earnings has moved north by a penny to 45 cents per share in the past 30 days. The company currently has an Earnings ESP of +10.11% and carries a Zacks Rank #2.

CoreWeave’s third-quarter 2026 results are likely to benefit from robust generative AI compute demand and rapid capacity additions. The company guided revenues between $3.45 billion and $3.6 billion and adjusted operating income between $200 million and $260 million. Nearly 500 MW of active power added in the second quarter, mostly in June, is expected to have boosted third-quarter contributions. Early in the quarter, CoreWeave secured more than $25 billion of net new commitments, lifting contracted power to roughly 4.2 GW, and kept signing capacity at about $40 million per megawatt. In August, it unveiled a 360-MW Indonesia expansion, a Solidigm storage agreement and a multi-billion-dollar Hudson River Trading deal, while September marked production-scale Vera Rubin NVL72 deployment with Cognition. However, capital expenditures of $11.5-$13.5 billion and interest expense of $860-$940 million are likely to have weighed on profitability, while supply-chain complexity and tightening storage supply remained notable concerns.

The Zacks Consensus Estimate for third-quarter earnings has become wider by a penny to a loss of $1.17 per share in the past 30 days. The company currently has an Earnings ESP of +14.19% and a Zacks Rank #3.

DigitalOcean is set to report third-quarter 2026 results on Nov. 3, with accelerating AI-native cloud demand expected to have aided the top line. DOCN guided revenues of $304-$307 million, implying 32-34% year-over-year growth, and non-GAAP EPS of 28-30 cents. Remaining performance obligations of $894 million at second-quarter end, with $366 million due within 12 months, are likely to have supported visibility. In AI/ML, Spot GPU Droplets and AMD Instinct MI355X availability in August, plus Managed Agents entering public preview in September, are expected to have lifted adoption. In core cloud, new Kansas City and Memphis data centers opened in August, while Kubernetes Isolated Worker Nodes and PostgreSQL/MySQL Advanced Edition reached general availability in September. Cloudways launched Velocity for Node.js hosting. However, elevated GPU capex, funded partly by a $725 million equipment financing facility, plus rising depreciation and interest costs, are expected to have weighed on profitability, with adjusted EBITDA margin guided at 38-39%.

The Zacks Consensus Estimate for earnings has moved south by a penny to 32 cents per share in the past 30 days. The company currently has an Earnings ESP of +26.81% and a Zacks Rank #3.