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Five Trends in 2H24

We expect e-commerce to have a strong 2H24, allowing the sector to meet or exceed 11% growth expectations 2024 as Amazon’s same-day/one-day initiatives appear to be reviving the secular shift from brick-and-mortar retailers. We continue to watch other secular adoption trends, including mobile commerce (m-commerce) and buy now, pay later (BNPL), which should also help drive growth. Despite some signs of a slowing economy/consumer, digital advertising should have a solid 2H24 and meet/slightly exceed 9% growth expectations for the year. Although growth has shown broad improvement over the last 18+ months, Meta’s exceptionally strong results are a particularly reassuring data point. This, coupled with strong data from the major FAST competitors (primarily Netflix and Disney), should hasten the secular shift of TV ad budgets from linear to streaming. Total payment volume growth decelerated modestly from ~9% in 2023 to 7% in 1Q24. In the context of higher interest rates and what appears to be a modest weakening in the consumer, it would appear 2H24 reacceleration may be overly optimistic. As such, total payment volume growth expectations of ~9% may prove too aggressive. Enterprise software stands out as a key area of weakness as many/most vendors reported disappointing results, guidance, or both. While weakening demand and AI “crowding out” were the primary causes for the weakness, it appears there are lingering structural concerns that could pressure the sector further in 2H24, jeopardizing the 14% growth for the year. As expected, public cloud delivered the most consistent notable upside, as the Big 3 vendors all delivered strong results and guidance in the March quarter. More importantly, capex/backlog commentary suggests there could be continued acceleration in 2H24, making 20% growth expectations to be very much achievable.