In this article, we will look at the 10 Cheap Internet Stocks to Buy According to Hedge Funds.
Would March See a Pickup in Retail?
On March 6, Jan Kniffen, CEO of J Rogers Kniffen, appeared on CNBC’s ‘Squawk on the Street’ to discuss his outlook on retail. Weaving several threads of news in the retail space, he said that the fourth quarter was great despite an awful January and February due to the weather. However, the market is going to see a pickup in March as the calendar inches closer to Easter because even in the otherwise horrible month of February, the market saw a good Valentine’s Day.
He believed that March would see a pickup because the consumer still feels healthy, even if they are nervous. Spending has been pretty good on everything other than weather-related items, but the traffic has been slow. Kniffen believed that this trend is weather-related as well. He said that he isn’t too concerned yet, but while the retail numbers today may not make one nervous, tomorrow’s numbers may have the opposite effect. According to Kniffen, retailers are only seeing a little weakness, and that’s all weather-related.
READ ALSO: 12 Best Leisure Stocks to Buy Right Now and 12 Best Apparel Stocks to Invest In.
What Could Trump’s Tariffs Mean for the Retail Industry
Talking about the potential effects of tariffs on retailers, he was of the view that power and negotiating skills make up the necessary concoction to deal with the scenario. Companies with better logistics teams, experience with dealing with tariffs strategically, and a healthy position in terms of balance sheet are more likely to do well. Therefore, companies in the sector that are well-financed, boast great teams, and are executing flawlessly will do better than those struggling with dealing with tariffs. While Kniffen said that he couldn’t claim he isn’t worried about the tariffs, he isn’t terrified of them either, as the market knows how to deal with them.
The real question he posed was whether all that the market gets is 10% to 20% in China or whether it would really get 25% in both Canada and Mexico. In the second case, the whole economy gets dislocated, the consumer gets nervous, and everyone is terrified that they will quit spending and the market may go into a consumer-led recession.
However, if the tariffs were imposed only on China, the situation might be different. China has a significant export economy and would have to absorb a big chunk of the tariffs. It did so last time as well and is likely to do the same this time as well. The market will then also see substitution, trade down, and all the stuff we see when the consumer has to deal with it. The retail market will react to all that, and the big and strong members will likely react better.
With these trends in view, let’s look at the 10 cheap internet stocks to buy according to hedge funds.
A businesswoman using her mobile device to shop on a ecommerce platform.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of internet stocks with forward P/E less than 15, including stocks from the internet retail and internet content & information sectors. We then selected the top 10 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Cheap Internet Stocks to Buy According to Hedge Funds
10. Vipshop Holdings Limited (NYSE:VIPS)
Forward P/E: 7.06
Number of Hedge Fund Holders: 25
Vipshop Holdings Limited (NYSE:VIPS) is an online discount retailer for Chinese brands that primarily offers branded products to consumers through its website. It conducts its operations through Chinese subsidiaries and consolidated affiliated entities. Its product offerings include more than 17,000 international and domestic brands, including home goods, apparel, cosmetics, fashion goods, and other lifestyle items.
Despite a challenging year, the company’s results for fiscal Q4 2024 surpassed expectations. It saw positive growth in apparel categories, which accounted for 75% of total Gross Merchandise Volume, allowing it to surpass RMB200 billion in annual sales. Vipshop Holdings Limited (NYSE:VIPS) also saw a 2% year-over-year growth in the apparel category, which was attributed to a focus on retail fundamentals and strong execution. It offered unique off-price seasonal offerings, especially outdoor products and sportswear, further boosting growth.
Vipshop Holdings Limited (NYSE:VIPS) is focusing on improving its customer engagement, with its Super VIP membership undergoing double-digit growth in fiscal Q4 2024. Active members experienced a 50% year-over-year increase, bringing a positive light to the company. It ranks tenth on our list.
9. JOYY Inc. (NASDAQ:YY)
Forward P/E: 11.54
Number of Hedge Fund Holders: 26
JOYY Inc. (NASDAQ:YY) is a global technology company that operates a range of social products, including Likee for short-form videos, Bigo Live for live streaming, Hago for multiplayer social networking, an instant messaging product, and more. Its operations are divided into two segments: BIGO and All other. The BIGO segment covers social entertainment platforms such as Bigo Live, Likee, and imo, while the All other segment manages Hago, Shopline, and certain audio live streaming platforms.
The company is maintaining a strong focus on optimizing its products, executing its strategic priorities, boosting its global operational efficiencies and capabilities, and expanding its market penetration in developed countries. These efforts are yielding positive results for JOYY Inc. (NASDAQ:YY). Its group revenue reached $558.7 million in fiscal Q3 2024. BIGO, its core business segment, reported revenues of $496 million, delivering a slight year-over-year increase.
Furthermore, JOYY Inc.’s (NASDAQ:YY) stock is up significantly so far in 2025 after the finalization of the sale of its YY Live business in China to Baidu for $2.1 billion. On February 25, 2025, it received a final payment of $240 million. The company also resolved the safety concerns that resulted in Bigo Live’s removal from app stores, reinstating it on Google Play, and negotiating its potential return to Apple’s App Store.
8. Yelp Inc. (NYSE:YELP)
Forward P/E: 8.54
Number of Hedge Fund Holders: 27
Yelp Inc. (NYSE:YELP) connects consumers with local businesses through the internet. It offers a range of paid and free advertising products to businesses of all sizes, including CPC Advertising (Yelp Ads) and Multi-location Ad Products. This allows businesses to reach a larger audience and boost conversion of their services by advertising their products. Apart from advertising products, the company also offers consumer-interactive features that facilitate transactions between local businesses and consumers.
Yelp Inc. (NYSE:YELP) reported record net revenue and strong profitability in 2024, attributed to the strong execution of its product-led strategy. It accelerated the pace of its innovation, delivering more than 80 new features and updates. Fiscal Q4 2024 marked the 15th consecutive quarter of double-digit year-over-year revenue growth in its categories. Net revenue grew by 6% year-over-year to $1.41 billion, and net income rose 34% year-over-year to $133 million. Yelp Inc. (NYSE:YELP) also reported 8% year-over-year growth in adjusted EBITDA to $358 million.
Services remain to be the focus of the company’s road map and the driver of its business performance. Its new AI chatbot, Yelp Assistant, is also resonating with consumers, with project submissions through this feature up by more than 50% between fiscal Q3 and Q4 2024. The company ranks eighth on our list of the 10 cheap internet stocks to buy according to hedge funds.
7. Upwork Inc. (NASDAQ:UPWK)
Forward P/E: 12.92
Number of Hedge Fund Holders: 28
Upwork Inc. (NASDAQ:UPWK) operates an online working marketplace that connects professionals and agencies with businesses. Its marketplace offers are specialized for clients looking to hire. The company has a resilient and innovative platform and a strong business model that lends it a competitive advantage. It reported a record revenue of $191.5 million in fiscal Q4 2024, surpassing analyst estimates and reflecting a 4.1% year-over-year growth. Its adjusted diluted earnings per share (EPS) of $0.30 also surpassed the $0.25 forecast.
Upwork Inc. (NASDAQ:UPWK) reported a 12% year-over-year revenue growth in fiscal year 2024. 2024 marked the sixth consecutive year of double-digit growth outperformance for the company compared to the staffing industry. Management expects 2025 to be a year of accelerated execution around its focused portfolio of growth catalysts, AI, enterprise, and ads & monetization.
Engaging in AI remains a significant driver for Upwork Inc. (NASDAQ:UPWK). By employing AI in its platform, Upwork aims to enhance user experience, boost user engagement, and bolster its competitive market position. The company reported that the AI-related domain of GSV underwent a 60% year-over-year growth, reflecting future revenue growth potential.
Pernas Research stated the following regarding Upwork Inc. (NASDAQ:UPWK) in its Q3 2024 investor letter:
“Upwork Inc. (NASDAQ:UPWK) is a leading global platform in the online freelance marketplace, connecting businesses with independent professionals (freelancers) for collaboration. The stock has fallen by approximately 85% from its peak due to concerns over slowing growth and fears of AI disruption. However, our analysis suggests these concerns are overstated. The slowdown in growth is primarily due to temporary cyclical factors, while the long-term trend of businesses increasingly turning to skilled freelancers remains strong. Although market sentiment views Upwork’s business case as weakening, we see it as strengthening. We estimate a 70% upside potential from current levels, making Upwork a compelling long-term investment. Long form write-up here.”
6. eBay Inc. (NASDAQ:EBAY)
Forward P/E: 12.8
Number of Hedge Fund Holders: 45
eBay Inc. (NASDAQ:EBAY) is a global ecommerce company that connects buyers and sellers through its marketplace platforms in over 190 markets worldwide. It offers buyer, seller, and developer tools and transaction processing, user interfaces, and database and network applications allowing users to complete site transactions safely and reliably.
2024 proved to be a transformative year for the company from an innovation viewpoint. Its enhanced core AI platform enabled eBay Inc. (NASDAQ:EBAY) to launch its first proprietary large language models, boost productivity in key areas like engineering and customer service, and improve search efficacy.
The company continued top-line growth in fiscal Q4 2024, undergoing a GMV growth of more than 2% to $19.3 billion. This growth was attributed to solid consumer demand during the shortened holiday shopping season and strong execution of the company’s fiscal Q4 2024 roadmap. eBay Inc. (NASDAQ:EBAY) also rose non-GAAP earnings per share (EPS) by 15% to $4.88, creating significant shareholder value and returning nearly $3.7 billion of capital through repurchases and dividends.
The company is thus quite profitable and is rewarding shareholders in the same vein: around $1 billion in fiscal Q4 2024 alone through its dividend and share repurchases. Incidentally, the company recently announced a 7% increase in its quarterly dividend. Therefore, eBay Inc. (NASDAQ:EBAY) is stable enough to increase dividend payouts and continue producing bottom-line growth.
5. Match Group, Inc. (NASDAQ:MTCH)
Forward P/E: 9.5
Number of Hedge Fund Holders: 50
Match Group, Inc. (NASDAQ:MTCH) provides digital technologies through its elaborate portfolio of brands, including Tinder, Hinge, Match, OkCupid, Meetic, Pairs, Azar, Plenty Of Fish, Hakuna, and others. The Match platform is an online dating platform that allows users to search profiles and receive algorithmic recommendations. It also offers a one-to-one real-time video feature.
In 2024, Match Group, Inc. (NASDAQ:MTCH) delivered total revenue of $3.5 billion, up 3% year-over-year. It also attained its full-year AOI margin target of 36%, reflecting a continued focus on cost discipline. It is focused on executing its financial goals in the future: driving consistently improving revenue growth, strong free cash flow generation, and a target of returning at least 100% of free cash flow through dividends and share repurchases.
Management believes it is well-positioned to deliver on these targets in the quarters ahead. The company takes the fifth spot on our list of the 10 cheap internet stocks to buy according to hedge funds.
4. Baidu, Inc. (NASDAQ:BIDU)
Forward P/E: 9.14
Number of Hedge Fund Holders: 50
Baidu, Inc. (NASDAQ:BIDU) is a Chinese Internet search provider. It offers a Chinese-language search platform that allows users to search for information online, including webpages, news, images, and more. Its operations are divided into two segments: the Baidu Core segment and the iQIYI segment. The Baidu Core segment offers products and services categorized as Mobile Ecosystem, Baidu AI Cloud, and Intelligent Driving & Other Growth Initiatives. In contrast, iQIYI functions as an online entertainment service provider.
The company reported a slight year-over-year growth in its Baidu core revenue, reaching RMB27.7 billion. Its AI Cloud business delivered robust revenue growth of 26% year-over-year, primarily driven by the broad market recognition of Baidu, Inc.’s (NASDAQ:BIDU) AI capabilities. The company plans to continue investing in this megatrend to cement its leadership position as an AI innovator.
Baidu, Inc. (NASDAQ:BIDU) is rebuilding the entire product portfolio of its mobile ecosystem with AI, especially in Baidu Search. In addition, the company’s autonomous ride-hailing service, Apollo Go, is also functioning on a viable business model, strengthening its confidence in pursuing global expansion and exploring asset-light business models.
3. Etsy, Inc. (NASDAQ:ETSY)
Forward P/E: 9.46
Number of Hedge Fund Holders: 58
Etsy, Inc. (NASDAQ:ETSY) operates two-sided online marketplaces that connect sellers and buyers worldwide. In addition to its core Etsy marketplace, the company also comprises Reverb Holdings, Inc. (Reverb), a musical instrument marketplace, and Depop Limited (Depop), a fashion resale marketplace.
The company reported record revenue of $2.8 billion for fiscal year 2024, up 2% year over year. It also delivered strong profitability, with adjusted EBITDA of $782 million and margins of 27.8%.
In 2024, Etsy, Inc. (NASDAQ:ETSY) transformed by temporarily shifting its focus to holistically better customer experiences based on quality and reliability instead of near-term conversion. The company’s investments in this domain are expected to yield positive results, as it is now building on this improved foundation for 2025 and beyond. Its median price target of $46.80 implies an upside of 15.38% from current levels.
2. JD.Com, Inc. (NASDAQ:JD)
Forward P/E: 9.12
Number of Hedge Fund Holders: 78
JD.Com, Inc. (NASDAQ:JD) is an e-commerce company that deals with online retail and online marketplace through its retail website and mobile application. Its operations are divided into four segments: JD Retail, JD Logistics, Dada, and New Businesses segment. The JD Retail segment is engaged in online retail, marketing services, and online marketplace in China, while the JD Logistics segment covers internal and external logistics businesses. The Dada segment operates as a local on-demand delivery and retail platform in China. The New Businesses segment, in contrast, manages JD Property, Jingxi, and overseas businesses.
The company is expanding its JD Logistics segment globally, as it is a significant component of JD.Com, Inc.’s (NASDAQ:JD) overall success. It is doubling its warehouse capacity by 2025 and is focusing investments on AI and automation to boost efficiency and streamline customer experience. These technologies include 5G-powered smart logistics parks and intelligent warehousing systems.
In addition to this segment, JD.Com, Inc. (NASDAQ:JD) has strong overall operations. For fiscal Q4 2024, the company reported net revenues of around $147.5 billion, reflecting a 13.4% increase from fiscal Q4 2023. Net revenues for the full year 2024 reached $158.8 billion, an increase of 6.8% from the full year of 2023.
Ariel Global Fund is highly positive on the company due to its strong performance driven by Chinese stimulus, improved consumer spending, successful diversification strategies, and the ability to capitalize on growth opportunities like home appliance trade-in programs. It stated the following regarding JD.Com Inc. (NASDAQ:JD) in its Q3 2024 investor letter:
“China-based E-commerce company, JD.com, Inc. (NASDAQ:JD) was the top contributor in the quarter as the People’s Bank of China’s (PBOC) comprehensive stimulus measures bolstered investor confidence in the Chinese economy. The improving economic sentiment is fueling consumer spending, which benefits the company’s retail operations. Additionally, the company’s strategic decision to diversify general merchandise product offerings, expand its third-party marketplace business and monetize advertising streams has contributed to consecutive quarterly earnings beats. JD.com is also poised to capitalize on the home appliance trade-in program, which is one of its largest product categories. Given the favorable market environment, the company’s strategic positioning, and supply chain efficiency improvements, we continue to like its long-term growth prospects.”
1. PDD Holdings Inc. (NASDAQ:PDD)
Forward P/E: 10.66
Number of Hedge Fund Holders: 85
PDD Holdings Inc. (NASDAQ:PDD) is a Chinese multinational online commerce group and retailer that owns and operates a range of diverse businesses. It also has a strong logistics, sourcing, and fulfillment capabilities network that supports its operations. The company owns Pinduoduo, a popular online commerce platform in China, and also runs the fast-growing e-commerce marketplace Temu. Temu now operates in more than 50 countries worldwide.
Analysts are bullish on PDD Holdings Inc. (NASDAQ:PDD) and expect it to grow at a compound annual growth rate of 38% to 2026, driven by market share gains in China. Its continued expansion into international markets through the Temu platform is anticipated to accelerate and support this growth. Temu connects Chinese sellers and overseas buyers, allowing PDD Holdings Inc. (NASDAQ:PDD) to diversify its revenue base. It also holds a competitive advantage due to its group-buying model from small and medium businesses, which helps its listings to be cheaper than its competitors.
PDD Holdings Inc. (NASDAQ:PDD) is also focused on a high-quality development strategy and has been actively optimizing its platform ecosystem to deliver impactful results over the long run. This strategy has helped the company report impressive financial results. Its total revenues for fiscal Q3 2024 came up to around $14.157 billion, reflecting a 44% increase from the same quarter in 2023. Operating profit in the quarter also grew by 46% compared to the same quarter last year. The company is also moving a significant amount of its fulfillment operations to US-based facilities for Temu, which is expected to cut delivery time and shipping costs.
GreenWood Investors stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its Q4 2024 investor letter:
“Aside from transitory foreign exchange translation losses (as opposed to trading losses), the two other notable detractors from our portfolio were MEI Pharma and PDD Holdings Inc. (NASDAQ:PDD) in 2024.
PDD Holdings founder Colin Huang is who inspired us to “run 3x faster,” as the relentless corporate culture of PDD has built an e-commerce company with roughly the same GMV (gross merchandise value) of Amazon in one-third the time it took Amazon to build itself. Shares reacted negatively when the company decided to reinvest its record margins into even faster growth and creating a healthier supplier ecosystem. As it looks set to create a second Amazon with its international site Temu, we are highly attracted to the opportunity. Sales are growing 4x faster than Amazon’s, yet shares are priced at less than a quarter of the Amazon earnings multiple.
PDD is a perfect example of why we want to look outside of the “Big Ten” companies that are nearly a third of global market indices. We would not want to compete with the demanding corporate culture of PDD and Temu. Its operating model is relentless at identifying efficiency throughout the manufacturing and selling supply chain. Not only is it a more formidable competitor than Amazon, and growing much faster, but the valuation is 4x more attractive than Amazon’s…” (Click here to read the full text)
Overall, PDD ranks first among the 10 cheap internet stocks to buy according to hedge funds. While we acknowledge the potential of internet stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PDD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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