From Yahoo Finance.: 2025-06-04 23:31:00

JP Morgan analyst Cory Carpenter names Take-Two Interactive Software (TTWO) and Xometry (XMTR) as top picks in the internet SMID and video games sectors. This follows a reassessment showing small-cap internet stocks underperforming for the fifth year. Despite this, the sector shows resilience with projected revenue growth of 9% and 20% EBITDA margin in 2025.

A notable finding is the potential impact of the App Store ruling on companies like Match Group (MTCH) and Bumble (BMBL), offering some fee relief. The report also highlights specific opportunities and dislocations, with Take-Two Interactive a top pick due to the anticipated GTA VI release, and Roku, Inc. and Xometry worth watching.

Carpenter maintains an Overweight rating on Take-Two Interactive with a $250 price forecast, citing the highly anticipated GTA VI release in May 2026. He also rates Xometry Overweight with a $38 price forecast, projecting $595 million in marketplace revenue and $13 million adjusted EBITDA in 2025. Carpenter increases the price forecast for Roblox Corp. (RBLX) and Roku, Inc.

Carpenter also raised the price forecast for Applovin Corp. (APP) to $400, citing a first-quarter beat and app store ruling. However, he downgraded Bumble to Underweight with a $5 price forecast due to revenue declines and challenges in the online dating sector. Tinder’s turnaround is noted, but industry struggles persist.

Read more: Which Internet Software Stocks Is JP Morgan Bullish On?