Piper Sandler’s internet checks most positive for Amazon and Google

Piper Sandler analysts said its ad buyer checks were once again constructive, exceeding expectations for the sixth consecutive quarter after a series of misses during the period from Q1 2022 to Q4 2022.

Digital spend in 1Q was up 8.4% year-over-year, approximately 70 basis points above ad buyer’s expectation at the end of the quarter. Although 2Q outperformance was lower than 1Q’s 290 basis points, it still surpassed 4Q’s 40 basis points.

Looking into 2024, Piper Sandler said ad buyer forecasts about 8.4% digital growth for the fiscal year, down approximately 110 basis points from their March estimate. Analysts also noted a slightly weaker economy compared to three months ago.

“While key debates like student loans repayment and high rates have been better, certain verticals have struggled to recover (auto, financials) and the election creates some uncertainty,” the note states.

Amazon (NASDAQ:), Snapchat (SNAP), and Pinterest (NYSE:) all outperformed 2Q24 estimates by over 300 basis points, while TikTok’s growth fell well below previous levels.

Amazon has achieved an “incredible” level of data utilization through its Amazon Media Cloud (AMC), with even Google (NASDAQ:) and Meta contributing anonymized data due to the advantages.

Google’s 2Q spend increased by 6.2% year-over-year, about 120 basis points above the ad buyer’s prior expectation and in line with 1Q’s 130 basis points. This outperformance was primarily driven by YouTube, Piper Sandler noted.

“Our expert was impressed by new AI product launches at Google powered by Gemini that help with ad creative optimization and placement,” analysts said.

“In their view, people are too worried about chatbot disruption and ignore how Google uses AI to improve the core products. Execution sounds better,” they added.

Meanwhile, Snapchat’s audience growth has been weaker, and TikTok’s 2Q24 results were well below prior expectations.