Cantor Fitzgerald: What to Do With Internet Stocks Now

• Cantor Fitzgerald's composite of Internet stocks has declined 8.6 percent year-to-date versus declines of 5.3 percent in the S&P 500.
• Instead of continuing to underperform, Cantor analyst Youssef Squali said the firm views any pullbacks as opportunities to "gain/increase exposure to higher-quality names."
• Those names, according to Squali, include Google Inc GOOG, Facebook Inc FB, Priceline Group Inc PCLN, Alibaba Group Holding Ltd BABA and Amazon.com, Inc. AMZN.

• Cantor Fitzgerald's composite of Internet stocks has declined 8.6 percent year-to-date versus declines of 5.3 percent in the S&P 500.
• Instead of continuing to underperform, Cantor analyst Youssef Squali said the firm views any pullbacks as opportunities to "gain/increase exposure to higher-quality names."
• Those names, according to Squali, include Google Inc GOOG, Facebook Inc FB, Priceline Group Inc PCLN, Alibaba Group Holding Ltd BABA and Amazon.com, Inc. AMZN.

Cantor analyst Youssef Squali highlighted the week's technology news, indicating that much of what happened was positive for Internet companies. That could have helped the group outperform, with the Cantor Internet Index gaining 1.6 percent on the week compared with just a 0.4 percent increase in the S&P 500, as of Thursday evening.

Specifically, Squali was impressed by Twitter Inc TWTR interim CEO Jack Dorsey's move to restructure the product team. In that move, Dorsey promoted Jeff Seibert to head of consumer product. More than the move itself, Squali said that it indicated that Dorsey was "making his mark on the business," instead of waiting for the board to appoint a permanent CEO. Squali identified that appointment, along with an upcoming Project Lightning launch, as potential catalysts that could help the stock.

In other moves, Amazon announced that it would allow Prime downloads for certain TV shows and movies – providing the opportunity for customers to watch off-line. Squali said this would "help increase the appeal of its streaming service," which would help win over additional Prime customers. Along the same lines, Cantor was impressed by the reviews for Netflix's Narcos, noting that, "there is correlation between the launch of big original titles and subscriber growth."

Finally, Priceline's acquisition of AS Digital will help the company expand its OpenTable brand to Australia, Japan and other countries in the Asia-Pac region.

The analyst said that he prefers adding to or initiating positions in Google, Facebook, Priceline, Alibaba and Amazon.