NRDY

Internet Stocks Performance: Internet stocks are struggling as they lagged behind the S&P 500 and Russell 2000 in 2025 due to operational missteps, increased competition from generative AI, and inconsistent margins, despite a stable macroeconomic environment.

2026 Outlook on AI Monetization: Analysts emphasize that for internet companies to maintain valuations in 2026, they must show significant progress in AI monetization and profitability, alongside improved execution.

Stock-Specific Insights: JP Morgan's analyst Bryan M. Smilek rates Duolingo and Coursera as Overweight, citing potential for growth, while Etsy and Udemy are rated Neutral, and Nerdy Inc. and Chegg are Underweight due to negative sentiment and performance concerns.

AI Integration in Education: The integration of AI in education is expected to diversify traffic sources and enhance learning products, with companies that leverage enterprise tech and proprietary content being better positioned for success in this shift.

Shift to Digital Education: The U.S. education market is transitioning from traditional methods to digital, career-focused programs, driven by student demand and government initiatives supporting workforce development and EdTech adoption.

Growth of Hybrid Learning Models: Companies offering hybrid and digital learning models are experiencing enrollment growth, with technology integration enhancing student engagement and retention, particularly in online and adaptive learning systems.

Career-Oriented Programs: There is a rising demand for credentialed skills, with education companies focusing on career training in high-demand fields like healthcare, aligning with workforce needs and benefiting from online delivery.

Government Support for Education: Federal and state initiatives are promoting education and workforce alignment, including new agreements to streamline program delivery and policies aimed at advancing AI education for future careers.