SMID Internet: Learnings from Earnings - 1Q26

Research evidence excerpt

SMID Internet: Learnings from Earnings - 1Q26

Equity Research

20 May 2026

SMID Internet

Learnings from Earnings - 1Q26

Industry UpdateAnother tough quarter for SMID internet as AI worries give

way to broader consumer, Iran conflict concerns. Three key

themes to help sift through the pieces. Updated views U.S. Internet POSITIVE

through to 2Q prints late summer. Increasingly seeing GAAP U.S. Internet

EPS valuation support across our coverage. Trevor Young, CFA

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trevor.young@barclays.com

The Key Takeaway: To say 2026 has been a challenging year for SMID internet is an BCI, US

understatement, and 1Q on-cycle earnings offered little reprieve. YTD performance has been

Ross Sandlerdismal, with the median stock -28% vs. +12% for the NASDAQ (priced as of 5/18 close). April and

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May have been particularly painful for almost every name in our SMID coverage (-7% median vs.

ross.sandler@barclays.com

+20% NASDAQ) and, as detailed in Figure 1 below, T+1 performance post earnings has been on BCI, US

balance negative. In select sub-sectors, AI disintermediation worries have subsided for now.

Alex HughesThis is most notable in e-commerce and to a lesser extent in online travel. Those worries

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have now been replaced with concerns on the underlying health of the consumer as there

alexander.hughes@barclays.com

are some early indications of consumer demand slowing in April (link) as the Iran conflict BCI, US

raises inflation worries once again. Similarly, that conflict has created some disruption in

Michael DiSantoonline travel, with names like BKNG and TRIP lowering their respective full year guides. While

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timing on resolution remains unclear, and could become a worsening concern as the year

michael.disanto@barclays.com