Tech giants like Meta and Snap are facing a 'perfect storm' of weak growth prospects that could lead to limited upside for stocks already down more than 50% this year

Even after a more than 50% year-to-date decline, the going could get even harder for digital advertising platforms.

A perfect storm has arrived for the digital advertising space that could translate into limited upside for the companies impacted in the near-term, according to the Wall Street firm.

There are three factors that are adding to the concern about the advertising space. The factors that are included are according toBarclays.

This is the first thing. The second quarter will see a step-down in spend and conversions.

There are two New challengers like Apple and TikTok are taking share at a time when the macro is weak.

There are three. Tough comparisons are documented.

"We think this cocktail of events is likely to generate the lowest growth rate for the sector in years, and current valuations only partially reflect this scenario," saidBarclays in a report. The industry is expected to grow this year.

Strong consumer spending habits have led to a decline in demand for different advertising solutions. The years-long trend of an economic recession is starting to slow down.

Second-quarter earnings from digital advertisers are expected to see a subdued reaction from investors, and that's why the price target for Meta, Snap, and other companies has been lowered.

Is there enough money to go around in the years to come? The strong growth of TikTok's and Apple's budding advertising businesses will capture a third of every incremental ad dollar in the next five years, according to the argument made byBarclays.

According to the note, Apple's advertising business has grown to about $7 billion, while TikTok is on track to grow its advertising revenue from $4 billion to more than $12 billion this year.

The question is who is going to lose out. "We think it's likely that everyone with growth figures from Snap, Meta, YouTube and the open web already reflecting some of the beating," saidBarclays.

The price target for Meta has been slashed byBarclays. The stocks are not near their peaks in 2021.