US INTERNET : Navigating the YTD Downturn: AI-Driven Multiple Compression Meets Weakening Consumer Confidence

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US INTERNET : Navigating the YTD Downturn: AI-Driven Multiple Compression Meets Weakening Consumer Confidence

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US INTERNET

Navigating the YTD Downturn: AI-Driven Multiple

Compression Meets Weakening Consumer Confidence

YTD, all but four stocks in our coverage are lower. Despite 2027 estimates largely being unchanged,26 MAY 2026

Sector Research Report we’ve seen severe multiple compression across our coverage, averaging ~20% with the average

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YTD price return being ~16%. We attribute multiple compression to (1) persistent AI disruption fears

Research Analysts & Publishing Entities

and (2) weakening consumer confidence broadly.

Nick Jones

BNP Paribas Securities Corp1 AI fears are overdone+1 (929) 742-0211

nick.2.jones@us.bnpparibas.com In current form, AI chat applications do not provide incremental insights into pricing, beyond what a

vertical marketplace can provide, nor do they meaningfully increase the selection that a vertical

Luke Meindl

marketplace can provide. However, as evidenced in our survey below, ~50% of consumers are usingBNP Paribas Securities Corp1

+1 (201) 686-6757 AI tools with varying levels of success and confidence — in total, we believe AI chat applications can

luke.meindl@us.bnpparibas.com help improve ~50% of the experience and quality insights that a traditional vertical marketplace can.

Valerie Zhang, CFA

BNP Paribas Securities Corp1 The health of consumers may increasingly be in focus

(+1) 201 686 3261 Consumer confidence has been weakening across all income brackets, with consumers with over

valerie.zhang@us.bnpparibas.com $50K in household income being somewhat more resilient.

What could turn things around?

1) AI chatbots continue to divert attention toward enterprise vs.