In a detailed report released this morning from Imran Khan and the North America Equity Research team at JPMorgan, Internet stocks outperformed the S&P 500 by 9% in 2007 and are expected to continue to rise throughout 2008.
JPMorgan is predicting that Internet stocks will have a 34% earnings growth this year while the earnings growth for the S&P 500 is only predicted to grow by 8%.
Why does JPMorgan predict such a rise in Internet Stocks? They have proven that faster internet speeds and the ecommerce boom goes hand in hand. Once people have a reliable connection they can depend on to take care of tasks online, it becomes much easier for people to get used to doing. These same people are the reason that Internet stocks are expected to have such a growth spurt. Once users get used to conducting more and more business online, they become more comfortable ordering their products online. With companies offering such easy ways to purchase products and have them shipped right to your home, it’s no wonder JPMorgan expects such a rise in earnings.
Another reason that earnings are expected to see such increases in 2008 are because of the use of social network sites and blogs to get more interaction out of users and give them a sense of community.
What does this mean to the blogging community as a whole? It means that now more than ever we need to have good content on our blogs so that advertisers will want to target our sites to showcase their products. JPMorgan also shows a decrease in newspaper advertising with a continuing decline throughout the new year. The only reason they give for this is due to online advertising methods, search engine marketing in general. With the possibility of ads to be placed in front of targeted users, why wouldn’t marketers want their ads in front of the people who are looking for their services or products?
You can read the whole “Nothing but Net” report from JPMorgan to get a more detailed explanation of why Internet stocks are expected to continue grow.
Below you will find a neat chart showing what search engines people use the most according to JPMorgan’s research. I thought you might find it interesting to look at.
