Netflix, Inc. provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices. It has operations in approximately 190 countries. The company was incorporated in 1997 and is headquartered in Los Gatos, California.

Netflix, Inc.

Key Points
Netflix used to mail DVDs to customers, but it now operates the world's largest video streaming platform.
Blockbuster passed up the chance to buy Netflix for $50 million in 2000, and the streaming giant is now worth over $500 billion.
Netflix stock is up 112,700% since its IPO in 2002 -- and there might still be room for upside.
Netflix (NASDAQ: NFLX) was founded in 1997 to disrupt the video rental industry. Its business model introduced convenience by mailing DVDs to customers so they no longer had to visit a physical store. Blockbuster, which operated America's largest movie rental chain at the time, didn't see the value in Netflix's idea, because it turned down an opportunity to acquire the budding start-up for just $50 million in 2000.
Netflix shifted its focus to streaming in 2007, which eliminated the need for discs and other hardware altogether. This created an existential crisis for rental chains like Blockbuster, which are now a distant memory for most consumers. Investors who bought Netflix stock at the time of its initial public offering (IPO) and kept the faith are now sitting on a whopping 112,700% return.
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The company's valuation now stands at over half a trillion dollars -- talk about a missed opportunity for Blockbuster. But can the streaming giant still deliver upside for investors who buy it today?
Advertising and live events are key to Netflix's future growth
Netflix has over 300 million paying subscribers, which is far more than Amazon Prime's estimated 200 million subscribers, and more than double the 126 million subscribers using Disney's Disney+. The larger Netflix becomes, the harder it is to generate growth, so the company is taking full advantage of its incredible scale to outspend its competitors in an effort to remain the most attractive platform in the industry.
The company is on track to invest $18 billion to create and license content this year alone, and live events are becoming more of a focus because they are big draw cards for new members. Netflix exclusively showed both Christmas Day NFL games last year, which each attracted more than 30 million viewers. This made them the most streamed matches in the sport's history, so they'll be back again in 2025.
Moreover, following the success of the Mike Tyson vs. Jake Paul boxing match last November, Netflix doubled down on the sport this year. The platform livestreamed the Katie Taylor vs. Amanda Serrano bout on July 11, and it will show the Canelo Alvarez vs. Terence Crawford matchup in September.
In addition to attracting new members, live events also attract advertisers. Netflix now offers three subscription tiers: Premium ($24.99 per month), Standard ($17.99 per month), and Standard with ads ($7.99 per month). Ad-tier subscribers become more valuable over time because in addition to paying a monthly subscription fee, Netflix monetizes them through ads. The larger this user base becomes, the more money Netflix can charge businesses for ad slots.
Netflix's advertising revenue doubled in 2024, and management expects it to double again in 2025. As of the last update (in the fourth quarter of 2024), the ad-supported tier accounted for 55% of all new sign-ups in countries where it's available, so it's creating a huge opportunity for Netflix to bring advertisers to the platform.
Netflix's revenue growth is reaccelerating
Netflix generated a record $11.1 billion in total revenue during the second quarter of 2025 (ended June 30). It represented a 15.9% increase from the year-ago period, which was an acceleration from the company's first-quarter growth of 12.5%. According to management's guidance, revenue growth is likely to accelerate yet again to 17.3% in the upcoming third quarter (which ends on Sept. 30). This trend highlights the company's momentum, thanks in part to its booming advertising business.
Netflix also delivered a record $3.1 billion in net income during the second quarter, which marked a whopping 45% jump from the year-ago period. It translated to $7.19 in earnings per share (EPS), comfortably above Wall Street's consensus estimate of $7.08.
Netflix is one of the few profitable pure-play streaming providers, which is key because this cash flow fuels its content spending, which in turn attracts more members and keeps the flywheel spinning. Without its billions of dollars in quarterly net income, the company would have to rein in its formidable content engine, which could result in a loss of market share.
Netflix stock isn't cheap right now, but long-term investors can still do well
Since Netflix stock is up by a staggering 112,700% since its IPO, are you late to the party if you don't already own it? It certainly isn't cheap at the moment -- it's trading at a price-to-earnings (P/E) ratio of 51.5, which is twice what you'd pay for the S&P 500 right now (24.7). In other words, Netflix is far more expensive than the broader market.
The stock looks a little more reasonable if we value it based on its future potential earnings. Wall Street's consensus estimate (provided by Yahoo! Finance) suggests Netflix will generate $30.87 in EPS in 2026, placing its stock at a forward P/E ratio of around 38.
No matter which way we look at it, investors who want to buy Netflix stock right now have to get comfortable paying a premium. Whether significant returns will follow might depend on an investor's time horizon. For example, an investor who is looking for big gains in the next 12 months might be left disappointed because of Netflix's valuation, but an investor willing to hold on to it for the next five years could do extremely well if the company's earnings continue to grow.
A five-year time horizon will give Netflix's advertising business time to flourish, which could be a major tailwind for its stock price. In fact, according to an internal forecast, the company plans to double its total 2024 revenue of $39 billion by 2030, with $9 billion set to come from selling ads. If those targets are met, the next five years will probably be very rewarding for shareholders.
Should you invest $1,000 in Netflix right now?
Before you buy stock in Netflix, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,050,477!*
Now, it’s worth noting Stock Advisor’s total average return is 1,055% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Following a 112,700% Gain Since Its IPO, Is Netflix Stock a Buy, Sell, or Hold in 2025?

Tuesday, July 22, 2025
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including NVIDIA Corp. (NVDA), Amazon.com, Inc. (AMZN) and Meta Platforms, Inc. (META), as well as two micro-cap stocks Air T, Inc. (AIRT) and Crown Crafts, Inc. (CRWS). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.
These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Ahead of Wall Street
The daily 'Ahead of Wall Street' article is a must-read for all investors who would like to be ready for that day's trading action. The article comes out before the market opens, attempting to make sense of that morning's economic releases and how they will affect that day's market action. You can read this article for free on our home page and can actually sign up there to get an email notification as this article comes out each morning.
You can read today's AWS here >>> Earnings Beats for GM, DHI, KO, etc. Lead Pre-Markets Slightly Higher
Today's Featured Research Reports
NVIDIA’s shares have outperformed the Zacks Semiconductor - General industry over the past year (+38.3% vs. +34.4%). The company is benefiting from the strong growth of artificial intelligence (AI) and high-performance, accelerated computing. The growing demand for generative AI and large language models using graphic processing units (GPUs) based on NVIDIA’s Hopper and Blackwell architectures is aiding data center revenues.
The continued ramp-up of Ada RTX GPU workstations in the ProViz end market, following the normalization of channel inventory, is acting as a tailwind. Collaborations with more than 320 automakers and tier-one suppliers are likely to advance its presence in the autonomous vehicle space.
The Zacks analyst expects NVIDIA’s revenues to witness a CAGR of 29% through fiscal 2026-2028. However, a limited supply of Blackwell GPUs could hinder its ability to meet demand. Rising costs associated with the production of more complex AI systems will hurt margins.
(You can read the full research report on NVIDIA here >>>)
Shares of Amazon.com have gained +23% over the past year against the Zacks Internet - Commerce industry’s gain of +27.6%. The company’s top-line is driven by steady momentum in Prime and AWS. Strengthening AWS services portfolio and its growing adoption rate contributed well to AWS performance. Ultrafast delivery services and expanding content portfolio were beneficial.
Strengthening relationships with third-party sellers was a positive. Robust advertising business contributed well. Amazon’s expanding global presence, growing capabilities in grocery, pharmacy, healthcare and autonomous driving are key positives. Deepening focus on GenAI is a major plus.
The Zacks analyst expects 2025 net sales to increase 8.5% from 2024. However, Amazon announced mixed guidance for the second quarter. High tariffs imposed by President Trump on goods imported from China have cast uncertainty on retailers such as Amazon. AMZN's free cash flow has decreased significantly.
(You can read the full research report on Amazon.com here >>>)
Meta Platforms’ shares have outperformed the Zacks Internet - Software industry over the past year (+46.2% vs. +44.8%). The company is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its offerings like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.
META has been leveraging AI to improve the potency of its platform offerings. These services currently reach more than 3.43 billion people daily. Meta Platforms’ growing footprint among young adults, driven by improving recommendations, boosts its competitive prowess. AI usage is making it a popular name among advertisers. This is expected to drive top-line growth.
Meta Platforms now expects to invest significantly more over the next few years in developing more advanced models and the largest AI services in the world. However, monetization of these AI services will take considerable time, which is a concern.
(You can read the full research report on Meta Platforms here >>>)
Shares of Air T have outperformed the Zacks Transportation - Air Freight and Cargo industry over the year-to-date period (+20.3% vs. -17.8%). This microcap company with a market capitalization of $57.74 million has its diversified aviation model deliver margin resilience and recurring revenues despite top-line moderation.
The Commercial Aircraft arm grew adjusted EBITDA 60.7% amid fewer asset teardowns, driven by a profitable pivot to high-margin engine parts, led by Contrail. The Ground Support arm benefits from a $14.3 million backlog and USAF contracts but remains unprofitable. Overnight Air Cargo revenues grew 7.3%, aided by FedEx contract scale, though adjusted EBITDA fell on one-time costs.
Digital Solutions posted 25.7% growth via high-margin SaaS, with recurring revenue momentum. Equity investments enhance returns with low risk. Risks include elevated debt ($115.3 million), persistent net losses, concentrated FedEx exposure and weak cash flows. Despite tailwinds in MRO, cargo and leasing, valuation reflects ongoing profitability challenges.
(You can read the full research report on Air T here >>>)
Crown Crafts’ shares have underperformed the Zacks Textile - Home Furnishing industry over the past year (-35.6% vs. -11.7%). This microcap company with a market capitalization of $30.54 million has seen July 2024 Baby Boom buyout added $11.9 million in sales and expanded its diaper bag and licensed goods suite, driving 28.2% bedding and diaper bag revenue growth and brand appeal.
Despite temporary margin pressure from tariffs and warehouse rent, operational streamlining and lower inventories are positioning the firm for improved leverage. Strong $9.8 million cash flow funded the buyout and dividends, though high debt and margin compression challenge financial flexibility.
Heavy reliance on Walmart/Amazon, tariff risk from China-sourcing and a $13.8 million goodwill impairment signal structural headwinds. While licensing and e-commerce strategies offer upside, sustainability of dividends and growth hinges on margin recovery, license renewals and diversification. CRWS offers deep value but depends on improved execution and cost recovery.
(You can read the full research report on Crown Crafts here >>>)
Other noteworthy reports we are featuring today include Netflix, Inc. (NFLX), Exxon Mobil Corp. (XOM) and AbbVie Inc. (ABBV).
Director of Research
Sheraz Mian
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Featured Reports
ExxonMobil (XOM) Banks on Oil-Rich Permian & Guyana Assets
The Zacks analyst likes ExxonMobil as it is advancing key oil projects in the Permian & offshore Guyana. But ongoing tariff tensions are affecting its already oversupplied chemicals business.
AbbVie's (ABBV) Skyrizi, Rinvoq Key to Top-Line Growth
The Zacks analyst says AbbVie's (ABBV) Skyrizi and Rinvoq are performing well which should support long-term top-line growth. Key headwinds are Humira LOE and slowing sales of the aesthetics unit.
Citigroup's (C) Overhaul Plan Aids Amid Weak Asset Quality
Per the Zacks analyst, Citigroup's organizational overhaul, international consumer banking business exits, to focus on core operations will aid financials. Yet, weak asset quality is concerning.
Union Pacific (UNP) Rides on Dividends Amid Sluggish Volumes
The Zacks analyst likes the shareholder-friendly measures adopted by Union Pacific. The decline in volumes due to soft consumer markets and reduced fuel surcharge revenue is a concern.
Cardinal Health's (CAH) Diverse Products Gives Competitive Edge
Per the Zacks analyst, Cardinal Health's diversified portfolio represents long-term opportunities. Its products provide the company with a competitive edge in the niche space with fierce competition.
Season Pass Aids Vail Resorts (MTN) Amid Weak Visitation
Per the Zacks analyst, Vail Resorts benefits from a stable season pass program and offerings such as the Epic Pass, Epic Day Pass, and Epic Australia Pass. However, weak visitation is a concern
Expanding LNG & Clean Energy Assets Aid TotalEnergies (TTE)
Per the Zacks analyst TotalEnergies' presence in entire LNG value chain and expansion of clean energy generation through joint venture and acquisition will boost its performance.
New Upgrades
Subscriber Addition, Content Strength Drives Netflix (NFLX)
Per the Zacks Analyst, continuing subscriber addition coupled with expanding content portfolio are the key catalysts that will help Netflix to sustain growth going forward.
Personal & Commercial business lines Aid Progressive (PGR)
Per the Zacks analyst, Progressive is set to grow on solid Agency, Direct and Property businesses of Personal Auto and Commercial Auto segments, which will drive improvement in net premiums.
Corning (GLW) Rides on Strong Demand, Portfolio Strength
Per the Zacks analyst, solid momentum in the Optical Communications and Specialty Materials segment will likely drive Corning's top line. Strong focus on innovation is a tailwind.
New Downgrades
Expected Decline in Volume & High Debt to Ail Goodyear (GT)
Per the Zacks analyst, lower expected tire volume sales in 2025 are likely to hurt Goodyear's top-line growth. Rising debt level is also a concern.
Currency & Tax Volatility to Hurt V.F. Corp's (VFC) Earnings
Per the Zacks analysts, V.F. Corp's global footprint exposes it to currency and tax rate volatility, which could weigh on earnings. The tax rate is predicted to rise in the next couple of years.
Rising Expenses Squeeze Elevance Health's (ELV) Margins
Per the Zacks analyst, high operating expenses are likely to keep pressuring Elevance Health's margins. Also, its deteriorating benefit expense ratio suggests less premiums left after paying claims.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Top Research Reports for NVIDIA, Amazon.com & Meta Platforms

Key Points
Netflix turned in strong results and upbeat guidance.
However, the stock fell as expectations were high going into the recent report.
The Netflix story remains unchanged, but the stock's valuation has gotten pricey.
Netflix (NASDAQ: NFLX) once again delivered strong revenue and earnings growth when it reported its Q2 results on July 17, but the stock nonetheless fell on the news. The video streaming company has been a strong performer this year, with the stock up 38% year to date as of market close July 21 despite the pullback. As such, expectations were high going into the report.
A huge market winner over the years, let's see if this pullback could be a buying opportunity, especially after the company raised its guidance.
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Solid growth and upbeat outlook
Netflix said the key to its success is offering a wide array of quality series and films that resonate with its viewers. It noted that a hit show or film typically only accounts for about 1% of total viewing, so it looks for a continuous stream of quality content across regions and genres to keep viewers and bring in new ones.
As an international company, Netflix is also using a "local for local" content strategy to appeal and connect with audiences in their home countries. It said non-English content now makes up more than one-third of its viewing hours. Meanwhile, these shows can also become hits with American audiences, such as Squid Game from Korea, or Japan's Alice in Borderland.
Netflix's investment in local content has been helping drive its results, as international revenue growth has been outpacing U.S. and Canadian growth. This continued in Q2.
Asia-Pacific growth led the way, with revenue climbing 24% to $1.3 billion, while EMEA (Europe, Middle East, & Africa) revenue jumped 18% to $3.5 billion. Latin American revenue rose 9% to $1.3 billion, but was up 23% in local currencies. U.S. and Canada revenue, meanwhile, grew 15% to $4.9 billion.
Netflix's overall revenue rose 16% to $11.08 billion, which was just ahead of the $11.07 billion analyst consensus, as compiled by LSEG. Earnings per share (EPS) soared 47% to $7.19, surpassing the $7.08 analyst consensus.
Most of Netflix's revenue growth currently appears to be coming from price increases and membership additions. However, growing its ad business is a priority. Its ad revenue is expected to double this year, and it recently rolled out its new adtech platform to all of its ad markets.
The company also continues to expand its live programming, including boxing matches and two scheduled NFL games on Christmas. It also has weekly live programming through its broadcast of WWE's Monday Night Raw.
Looking ahead, Netflix guided for Q3 revenue to climb 17% with a 31% operating margin. It said its second-half operating margin will be lower than the first half due to higher content amortization and sales and marketing costs related to its larger second-half content slate.
For the full year, it raised it revenue guidance, taking it to a range of $44.8 billion to $45.2 billion, up from a prior outlook of between $43.5 billion to $44.5 billion. It also increased its operating margin outlook from 29% to 30%. Currency rates are responsible for about half the operating margin increase.
Should investors buy the pullback?
Netflix stock had a strong year leading up to earnings, so expectations were high. The company turned in solid results and boosted its outlook, although that was not enough for investors to continue to push the stock higher. The stock is down about 1.6% after the report.
That said, nothing has fundamentally changed with Netflix's story. The company is still benefiting from price increases, while its membership numbers continue to grow, especially in international markets. Meanwhile, advertising should become the company's largest growth driver over time when its ad-tiered plans and live content gain more scale.
However, with the stock trading at a forward price-to-earnings ratio (P/E) of 47 times analyst estimates for 2025, even after the pullback, I would not be a buyer at current levels. I think the stock has solid potential over the long term, but I'd still want a cheaper valuation before I hop on board.
Should you invest $1,000 in Netflix right now?
Before you buy stock in Netflix, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,050,477!*
Now, it’s worth noting Stock Advisor’s total average return is 1,055% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Netflix Lifted Guidance. Is the Stock a Buy Following Its Drop?

Valuations are stretched, but is it a bubble? In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss that as well as:
The latest AI and energy news.
ASML's earnings.
A surprising report from Johnson & Johnson.
Alphabet's $25 billion data center and energy deals.
Bold predictions this earnings season
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
A full transcript is below.
Should you invest $1,000 in ASML right now?
Before you buy stock in ASML, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ASML wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,050,477!*
Now, it’s worth noting Stock Advisor’s total average return is 1,055% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
This podcast was recorded on July 16, 2025.
Travis Hoium: Is a market bubble farming right under our noses? Motley Fool Money starts now. I'm Travis Hoium, joined by longtime Fools, Lou the legend Whiteman, and from an undisclosed location somewhere in Europe, Rachel Warren. Today, we're going to get to ASML and Johnson & Johnson's earnings results, which came in overnight. Google's $25 billion energy deal. But first, are we in a market bubble? Lou, I remember Cloudflare trading for 100 times its sales at the peak of the market in 2021. The stock then fell 80% in six months. Today, Palantir is trading for 110 times sales. The stock is over $150 per share. Robinhood, 25 times sales at $100 per share. It looks like a bubble. It feels a little like a bubble. Are we in a bubble?
Lou Whiteman: Look, Travis, there's always a bubble somewhere. Valuations they look stretched. My go-to stat here is the S&P 500 is currently trading at 25 times earnings. That's well above the 20-year average, about 16 times earnings. That's frothy. I do think you need to keep that in mind. For example, I think Hidden Gems just sold down some of its position in Arista Networks based on high valuation. You keep that in mind. But here's the thing. Markets can remain at high valuations for a long time. I'm not running for the exits. I'm being selective. I'm looking for opportunities out there in areas like financial services and income stocks. I'm keeping that in mind, I'm adjusting as we go, but I also want to stay in the market.
Rachel Warren: I don't think I would say that we are in a stock market bubble, but I do think it's an important point to discuss. We're looking at valuations of a lot of tech companies right now, in particular. I think it's easy to be concerned that there might be a bubble forming. We've heard a lot of analysts make comparisons to the .com boom, of course. There's a lot of excitement that we're seeing in the tech base in particular, right now. This is being driven by the AI revolution, whether it's data center companies, chip companies, or software-based platforms like Palantir, as you mentioned, that are boosting their business with AI-driven services. This is where so much of the market seems to be focused. It's also a time where a lot of the modern pace of innovation is tracing back to right now. You look at a company like Robinhood. You've got the broader resurgence of interest in crypto that's benefited the platform. It's expansion into Europe, stock tokenization, and crypto futures. Those are just a few catalysts.
I will say, I think it creates a situation where many valuations are heightened, probably in some cases, for more than a given company's intrinsic worth. But I don't think that that valuation dynamic is true across the board. I think you can look at other industries where valuations are much more reasonable, find quality accessible businesses. For that reason, I don't think we're in a broad stock market bubble. But are valuations too high in some cases? I think that's the case. I think it's more important than ever for investors to be discerning when evaluating the intrinsic worth of companies, making sure it's the right fit for their personal portfolio, thinking about, where's your money? What is the true monetizable business here? Does it have those durable value-driven tailwinds for the company's growth? I think those are the questions that we have to ask ourselves as investors.
Travis Hoium: Sounds like the final answer is, we're probably in a bubble somewhere. We just don't know exactly where it is. I want to get to one of the companies that's involved in potentially inflating bubbles. That is Google and their latest AI news. We'll do that after a quick break.
Potential bubbles, let's turn to artificial intelligence, and Google announced $25 billion in data center and energy deals in the PJM, which manages electricity across 13 states from New Jersey to North Carolina, all the way over to Chicago. This comes on the heels of Energy's biggest inflation numbers in quite a while. 5.8% increase in electricity prices over the past 12 months. That was reported just yesterday. AI is an energy hog. We know that Rachel utilities have been a boring way to make money for decades, 1, 2, 3% growth. But does the recent change in artificial intelligence and the energy needs there, does that change anything? Does that change the way that you look at the utility space in any way?
Rachel Warren: For me, personally, I wouldn't say that this changes the trajectory of my investing interests in the energy space. I will say, it's not a space I gravitated toward. There are plenty of fellow fools who do. But if anything, as an alphabet investor, this makes me more excited about the investments this company is making that I think can help cement its continued leadership and strides in the AI space. In addition to that $25 billion data center and AI infrastructure investment, Google's also spending about $3 billion to modernize two hydropower plants in Pennsylvania, and that's designed to facilitate the power demand from AI and data centers in the area. One thing to bear in mind, PJM is the biggest electric grid in the nation. Its coverage area includes the world's largest data center market, that's located in Northern Virginia.
We're at a time where PJM and other providers are really struggling to keep up with rising electricity demand amid the AI boom. AI training, particularly for large language models and generative AI, it's incredibly energy intensive. A single generative AI query can require almost 10 times more electricity than a traditional Internet search. Data centers are already consuming a notable percentage of the nation's electricity. Unlike some other energy demands that can fluctuate, AI requires continuous operation. That means you need a constant power supply. That strains existing grid capacity. There was a meeting that just happened yesterday at Carnegie Mellon in Pittsburgh. We have the president, his cabinet, and executives from a range of companies, including Alphabet, were there. There was a report that the companies there, including, of course, Alphabet's Google, announced a combined total of $90 billion in investments in data centers, energy, and power infrastructure. From my perspective, that's the cost of doing business for these major providers. But if you are interested in the energy space, I think it creates some nice tailwinds there.
Travis Hoium: Lou, of course, Rachel mentioned the hydroelectric plants, and of course, Brookfield Asset Management was involved. They are the company that's behind a lot of electricity generation, not only in the US, but around the world, a lot of renewable energy. Is the investing takeaway here as simple as AI is a tide that is lifting all of these utility boats, and maybe we're going to lose the consumer overboard, or what are you taking away from?
Lou Whiteman: No, my investing takeaway is not by the utilities. I'm not there yet, but the invest takeaway for me is you said it, Travis. It's Brookfield. It's always Brookfield or something like that. Look, I think the demand for energy, that trend is real. It's a long-term tailwind, but I don't want to invest in individual utilities. I don't like to pick winners among geographies or projects. My way to take advantage of this trend is to buy into a company making investments all over the sector, giving me broad exposure instead of just an individual company. Look at the Brookfield Renewable Partners case. That's the actual entity that Google's partnering with here. Brookfield Renewable is going to bring on 8,000 megawatts of capacity in 2025 alone. I'm going to take my chances getting that broad exposure instead of focusing on any one individual company and hoping that they ride the wave, as well.
Travis Hoium: I think that's probably a smart way to look at it, and you get a nice dividend yield with a lot of those asset owners as well. Next up, we're going to talk about two of the big earnings reports of the day. We'll do that after this break.
ASML, which makes critical equipment for making chips, all the artificial intelligence chips, the chips that's probably in your smartphone today. This equipment costs as much as $400 million for a single piece of equipment. They reported earnings overnight, beat on the top and bottom line with 7.7 billion euros in revenue and 590 euros per share in earnings. But the stock is down 10% today because they were a little cautious about 2026, saying they couldn't confirm. It was going to be a growth year. Lou, what are you taking away from this earnings report?
Lou Whiteman: Worth saying that, like you said, these are really expensive machines. Even in the best of times, this is a company that's tough to judge quarter to quarter. You miss one delivery, and it can throw off the quarter. You're going to have lumpy. You throw in tariffs, trade wars, and chip restrictions to China, and I understand the caution. But I'm going to note here, CFO Roger Dyson attributed to this beat, this last quarter's beat to tariffs having "less negative impact than they anticipated." I think there's a real chance this trend can continue where the uncertainty is there, but it turns out not as bad as they thought because there's just so much demand out there, and if so, I think growth in 2026 can eventually be put back on the table, whether it comes or not for long term individual investors, the underlying growth story here, the need for more and more advanced chips and therefore, the need for more the machines that can make them. That's unchanged. I think Wall Street is overreacting today. I think this is still a great company with a great future up ahead.
Rachel Warren: What's interesting about this, Abi, as you noted, Travis, ASML, they beat on both the top and bottom line expectations. This was for their fiscal second quarter. Now, they gave guidance for the current quarter that missed expectations, and they warned that there might be the possibility of no growth in 2026. But it's not quite as bad as it appears at first glance. They forecast Q3 quarter revenue of between 7.4 billion euros and 7.9 billion euros at the upper end of that tier. I was just shy of the market expectations of about 8.3 billion euros for Q3. Taking a broader, more holistic look here, there are a lot of companies in the semiconductor industry that are facing similar headwinds as ASML is right now. There's a lot of uncertainty that's been created by the US tariff policy that remains the case. It's worth noting, management still expects their full year 2025 net sales to grow 15%, and they said that their AI customers' fundamentals are still looking really strong. Anything, management emphasized the continued uncertainty that's driven by macro headwinds, and that's a dynamic that competitors are contending with, too. They're preparing for growth in 2026.
But the reality that they and other adjacent players are facing right now in many ways. It goes back to external factors that they can't control. In my opinion, you've still got a quality business here. I think investors might need to moderate expectations. If macro headwinds shift in the short term, but I think the company is well-positioned to write those out.
Travis Hoium: Johnson & Johnson was the other big earnings report this morning. Stocks up 6% as we're recording. Rachel, this was another double beat. They said, they don't need to do deals out of desperation despite a Paden cliff. What were your takeaways from the report?
Rachel Warren: It was a fantastic quarter for the business. As you noted, a beat on both the top and bottom lines. They reported $23.7 billion in revenue. That beat estimates of 22.8 billion, adjusted earnings per share of $2.77. That was compared to analyst estimates of $2.70. That came with raised guidance for the year, as well, up 5.4%, at the midpoint. We had the chairman and CEO of the company say that their portfolio and pipeline is positioning them for elevated growth in the second half of the year with game-changing approvals and submissions and key disease verticals, including oncology, psoriasis, surgery, and cardiovascular, and they're looking to extend that as the year progresses. Broken down by segment, their innovative medicine segment, which is essentially their pharmaceutical business, grew 4.5% year over year. Their medical device business saw sales climb more than 7%. Those are fantastic figures for a company at this level of maturity. This is a business that I will note has been acquisitive in recent years. That goes back to everything from their acquisition of Abiomed several years ago, where they acquired the world's smallest heart pump from that acquisition.
They recently closed the purchase of intracellular therapies. That solidified their neuroscience portfolio. One important thing to note, this was something that CFO Joe Wolk addressed in a recent interview. They are facing patent pressures, particularly on some of their key older blockbuster drugs like Stelara. That's been a $10 billion-plus drug annually in recent years. But management thinks that, really, the expected gap in revenue from the generic competition is not going to have a noticeable impact on the company. That they're really well positioned to ride that out. Broadly speaking, going back to these recent acquisitions and their continued internal development pipeline. I will also say that management noted a revision in the impact of tariffs to 200 million. That was versus the 400 million that they were previously projecting. Now, there's still a lot of uncertainty about drug tariffs that is lingering, and something that their CFO said is, we're still really waiting to see what the administration shares in that regard. We're in an environment, of course, where there's a ton of uncertainty regarding tariffs and other cost pressures for businesses like this one. I will say this is one of the most well-bolstered companies in the pharma industry from a cash perspective. They're well-positioned to handle any headwinds that might come. They have an extensive domestic manufacturing presence that they are also looking to expand. This is also a company that has been paying and raising their dividend every single year for over six decades. It's a great company, in my opinion.
Travis Hoium: To end the show, I do want to get bold with some predictions here. Now, we are long-term investors, so a one-day drop in stock is maybe not that big a deal. It might even be opportunity. ASML is one of these companies wide moat. It's down after earnings, maybe an opportunity for those long-term investors. Now I'm thinking about opportunities like Netflix in the Quickstar days, Meta's drop when it was getting fit in 2022. What are the stocks that you're looking for a potential buy-the-dip stocks as we go through earning seasons, and maybe we have some short-term turbulence. Lou, let's start with you.
Lou Whiteman: The first name that comes to my mind is Mercado Libre. In part, because, look, given the markets, given the South American exposure, the wide range of businesses, there does tend to be volatility. There does tend to be dips. I think there could be opportunities. Look, for all of the growth that this company has delivered, crazy to think about, it's what, maybe one 20th the size of Amazon. It's a current position for me, and it's constantly on my radar.
Rachel Warren: One business I've been looking at recently is Toast. This has been a intriguing company to follow, particularly for me over the last 12-18 months. They really continue to expand the cohort of clients that they're onboard into their platform. They just booked Applebee's, which was their largest deal in company history. They added over 6,000 net new locations just in Q1 of 2025 alone, and they reached an annual recurring run rate that grew 31% year over year to about 1.7 billion as of the end of March. It's a sticky business. It resonates with a lot of small, medium-sized restaurant chains. But also some of these larger companies that are starting to see the value in Toast's platform. They're looking outside the restaurant space, too, convenience stores, companies like Top Golf, or more recent Partners for them. I think there's a lot to like about this business. I'm also quite impressed by their more recent profitability. It's one that I'd be curious to take a closer look at. They happen to go down that mark.
Travis Hoium: Thank you to Lou and Rachel for joining me today. As always, people on the program may have interest in the stocks that they talk about in the Motley Fool, may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial guidelines and is not approved by advertisers, are sponsored content, and provided for informational purposes only to see our full advertising disclosure, please check our show notes. For Lou Whiteman and Rachel Warren, and the entire Motley Fool team, I'm Travis Hoium. We'll see you tomorrow.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Lou Whiteman has positions in ASML, Cloudflare, and MercadoLibre. Rachel Warren has positions in Alphabet, Amazon, and Johnson & Johnson. Travis Hoium has positions in Alphabet, Cloudflare, MercadoLibre, and Robinhood Markets. The Motley Fool has positions in and recommends ASML, Alphabet, Amazon, Arista Networks, Cloudflare, MercadoLibre, Netflix, Palantir Technologies, and Toast. The Motley Fool recommends Brookfield Asset Management, Brookfield Renewable Partners, and Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Is the Stock Market in Bubble Territory?

The Natixis Loomis Sayles Focused Growth ETF is seeing unusually high volume in afternoon trading Tuesday, with over 163,000 shares traded versus three month average volume of about 35,000. Shares of LSGR were off about 0.5% on the day.
Components of that ETF with the highest volume on Tuesday were Nvidia, trading down about 2% with over 112.4 million shares changing hands so far this session, and Tesla, up about 1% on volume of over 37.5 million shares. Illumina is the component faring the best Tuesday, up by about 5.4% on the day, while Netflix is lagging other components of the Natixis Loomis Sayles Focused Growth ETF, trading lower by about 2.3%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tuesday's ETF with Unusual Volume: LSGR

Netflix (NFLX) could be a solid choice for investors given its recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.
Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.
Therefore, the Zacks rating upgrade for Netflix basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock Prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
For Netflix, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate Revisions
Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for Netflix
This internet video service is expected to earn $26.06 per share for the fiscal year ending December 2025, which represents no year-over-year change.
Analysts have been steadily raising their estimates for Netflix. Over the past three months, the Zacks Consensus Estimate for the company has increased 2.9%.
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
The upgrade of Netflix to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
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Netflix (NFLX) Upgraded to Strong Buy: Here's Why

Netflix (NFLX) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.
Over the past month, shares of this internet video service have returned +15.2%, compared to the Zacks S&P 500 composite's +5.2% change. During this period, the Zacks Broadcast Radio and Television industry, which Netflix falls in, has gained 17.6%. The key question now is: What could be the stock's future direction?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Revisions to Earnings Estimates
Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Netflix is expected to post earnings of $4.20 per share for the current quarter, representing a year-over-year change of +99.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The consensus earnings estimate of $19.78 for the current fiscal year indicates a year-over-year change of +64.4%. This estimate has remained unchanged over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $23.64 indicates a change of +19.5% from what Netflix is expected to report a year ago. Over the past month, the estimate has remained unchanged.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Netflix is rated Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue Growth
Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
For Netflix, the consensus sales estimate for the current quarter of $10.15 billion indicates a year-over-year change of +15%. For the current and next fiscal years, $38.91 billion and $43.84 billion estimates indicate +15.4% and +12.7% changes, respectively.
Last Reported Results and Surprise History
Netflix reported revenues of $9.82 billion in the last reported quarter, representing a year-over-year change of +15%. EPS of $5.40 for the same period compares with $3.73 a year ago.
Compared to the Zacks Consensus Estimate of $9.77 billion, the reported revenues represent a surprise of +0.6%. The EPS surprise was +6.09%.
Over the last four quarters, Netflix surpassed consensus EPS estimates three times. The company topped consensus revenue estimates each time over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Netflix is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom Line
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Netflix. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Is Trending Stock Netflix, Inc. (NFLX) a Buy Now?

Netflix NFLX delivered another solid quarterly performance in second-quarter 2025, beating analyst expectations and raising full-year guidance across multiple metrics. (Read More: Netflix Q2 Earnings Beat on Squid Game Finale, 2025 Outlook Raised)
The streaming giant's results demonstrate continued momentum in subscriber growth, advertising revenues, and content engagement, though investors face the question of whether current valuations offer attractive entry points or warrant a patient approach.
Netflix has delivered impressive returns for shareholders so far in 2025, with the streaming giant's shares surging approximately 35.7% year to date, significantly outpacing other streaming competitors like Apple AAPL, Amazon AMZN, and Disney DIS, as well as the broader Zacks Consumer Discretionary sector and the S&P 500. Shares of Apple have lost 14.5%, while Disney and Amazon have returned 8.8% and 3.6% in the same time frame, respectively.
NFLX Outperforms Sector, Competition
Image Source: Zacks Investment Research
Strong Revenue Performance Drives Guidance
The company reported second-quarter 2025 revenues of $11.079 billion, representing 16% year-over-year growth that exceeded the consensus estimate. More significantly, Netflix raised its full-year 2025 revenue forecast to $44.8-$45.2 billion from the previous range of $43.5-$44.5 billion. This upward revision indicates anticipated growth of 15%-16% on a reported basis, or 16%-17% when adjusted for foreign exchange fluctuations.
The increase in revenues stems from multiple growth drivers working in tandem. Member growth accelerated toward the end of the second quarter, exceeding internal forecasts, while the company's advertising business continues gaining traction with expectations to roughly double ad revenues in 2025. Currency effects also provided a tailwind, as U.S. dollar weakness against major currencies enhanced international revenue contributions when translated back to dollars.
For third-quarter 2025, Netflix projects revenues of $11.526 billion, representing 17% growth on both reported and currency-neutral bases. This guidance suggests sustained momentum across pricing, membership expansion, and advertising monetization.
The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $44.85 billion, indicating 15% year-over-year growth. The consensus mark for earnings is pegged at $25.81 per share, indicating a 30.16% increase from the previous year.
Netflix, Inc. Price and Consensus
See the Zacks Earnings Calendar to stay ahead of market-making news.
Margin Expansion Reflects Operational Efficiency
Netflix's profitability outlook has similarly improved, with the company raising its full-year operating margin target to 29.5% on a currency-neutral basis from the previous 29% forecast. At current exchange rates, this translates to approximately 30% reported operating margin for 2025. The second-quarter operating margin of 34% demonstrated the company's ability to scale efficiently while investing heavily in content.
The improved margin guidance primarily reflects the revenue upside flowing through to profitability, as operating expenses remain largely unchanged from previous forecasts. This operational leverage underscores Netflix's maturing business model, where incremental revenue growth translates more directly to bottom-line expansion.
Free cash flow projections have also increased to $8.0-$8.5 billion from approximately $8.0 billion previously, reflecting the enhanced revenues and margin outlook. This cash generation capability supports continued content investment while enabling shareholder returns through share repurchases.
Robust Content Pipeline Supports Long-Term Growth
Netflix's content slate in the second half of 2025 represents one of its strongest lineups, featuring highly anticipated returns of marquee franchises. The fifth and final season of Stranger Things headlines the offering, alongside the second season of Wednesday and the third season of Alice in Borderland. These established properties have demonstrated significant global appeal and engagement metrics.
The new content pipeline spans diverse genres and international markets, including Billionaires' Bunker from Money Heist creator Álex Pina, the thriller Black Rabbit starring Jason Bateman and Jude Law, and House of Guinness from Peaky Blinders creator Steven Knight. This international approach aligns with Netflix's successful "local for local" strategy while creating content with broader market potential.
Film offerings include major sequels like Happy Gilmore 2 and prestige projects from Academy Award winners, including Kathryn Bigelow's A House of Dynamite and Guillermo del Toro's Frankenstein. The diverse slate positions Netflix to capture engagement across demographic segments and viewing preferences.
Live Programming Expansion Creates New Opportunities
Netflix's expansion into live programming continues with significant sporting events, including marquee boxing matches and the NFL Christmas Day doubleheader. These events serve multiple strategic purposes: driving subscriber acquisition, commanding premium advertising rates, and creating appointment viewing that enhances engagement metrics.
The live programming strategy represents a differentiated approach within the streaming landscape, potentially creating competitive advantages in both subscriber retention and advertising monetization as the company scales these capabilities.
Investment Considerations and Outlook
Netflix's second-quarter results and raised guidance demonstrate continued execution across key operational metrics. The combination of subscriber growth, advertising revenue expansion, margin improvement, and strong content pipeline suggests the company remains well-positioned for sustained growth.
However, investors should consider current valuations relative to growth expectations and competitive dynamics within streaming. Netflix trades at a premium with a forward 12-month P/S ratio of 10.81 compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 4.48. The raised guidance may already be reflected in current share prices, potentially limiting near-term upside despite strong fundamentals.
NFLX’s P/S F12M Ratio Depicts Premium Valuation
Image Source: Zacks Investment Research
Conclusion
For existing shareholders, the results support a hold strategy given the company's demonstrated ability to execute across multiple growth vectors. New investors might consider waiting for more attractive entry points, particularly given the strong execution already evident in current valuations. The company's improving cash generation and margin expansion provide downside protection while the content pipeline supports long-term growth prospects. NFLX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Netflix's Outlook Remains Strong Post Q2 Earnings Beat: Time to Hold?

Disney DIS is riding high as its direct-to-consumer (DTC) streaming platforms — Disney+, Hulu and ESPN+ — reshape its growth trajectory. The integration of ESPN into the Disney+ app, followed by a full standalone launch later in 2025, is expected to capture a wider sports audience, giving Disney a unique edge in an increasingly competitive streaming market. This strategic initiative is already paying off; its streaming segment delivered $336 million in operating income in the second quarter, up dramatically from $47 million a year earlier. The turnaround builds on momentum gained last August, when ESPN+ helped propel Disney’s entire streaming business into sustained profitability.
Profitable streaming operations are enabling Disney to reinvest in blockbuster content like Moana 2 and Inside Out 2, which drive both streaming engagement and theatrical success. This content, in turn, amplifies revenues across merchandise, parks and cruises, leveraging the strength of the company’s core brands like Marvel, Pixar and Star Wars.
With profitability assured, Disney is in a position to shift from mere volume growth to building a sustainable, loyal customer base. Through bundles, international expansion, local content and its sports-driven strategy, its streaming boom seems well-positioned.
In the second quarter of fiscal 2025, Disney+ added 1.4 million subscribers, bringing its total to 126 million, while Hulu reached 54.7 million subscribers. Together, Disney closed the quarter with 180.7 million total streaming subscribers, representing a 2.5% sequential increase. This momentum signals that the company’s transition from conventional media to streaming is yielding real momentum.DIS’ Competition in the Streaming Space
Netflix Inc. NFLX, the streaming pioneer, dominates the U.S. market with more than $11 billion in the second quarter of 2025 and 45% earnings growth. Netflix's dominant scale, AI-driven recommendations and fast-growing ad-supported tier, nearly half of U.S. sign-ups, bolster its edge over Disney. With exclusive NFL and FIFA rights, plus unmatched success in weekly streaming charts through diverse, original content, Netflix’s expanding global subscriber base and accelerating ad business solidify its leadership and growth momentum.
Paramount Global PARA, through Paramount+ and Pluto TV, leverages its extensive CBS, Nickelodeon and Star Trek content to compete with Disney+ in family programming, live TV and classics. Paramount’s subscription revenues climbed 16% in the first quarter of 2025, fueled by growing subscribers, though streaming remains unprofitable due to debt and operating losses. Paramount’s rich content, cable networks and multi-revenue streams drive global viewership, keeping it positioned for growth despite profitability hurdles.
DIS’ Share Price Performance, Valuation & Estimates
DIS shares have gained 9.1% in the year-to-date period, underperforming both the Zacks Consumer Discretionary sector’s return of 10.6% and the Zacks Media Conglomerates industry’s appreciation of 13.5%.
DIS’ YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, DIS stock is currently trading at a forward 12-month Price/Earnings ratio of 19.46X compared with the industry’s 21.1X. DIS has a Value Score of B.
DIS’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Disney’s 2025 earnings is pegged at $5.78 per share, up a couple of cents over the past 30 days. This indicates a 16.3% increase from the figure reported in the year-ago quarter.
Image Source: Zacks Investment Research
DIS stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Can Disney's Streaming Boom Unlock Room for More Subscriber Growth?

For Immediate Release
Chicago, IL – July 21, 2025 – Today, Zacks Investment Ideas feature highlights Netflix NFLX, Disney DIS, Amazon AMZN and Paramount Global PARA.
Buy, Hold or Take Profits in Netflix After Q2 Earnings Report?
Investors appear to be a bit underwhelmed by Netflix’s Q2 report, despite the streaming king posting favorable quarterly results after market hours on Thursday.
Down 5% in this morning's trading session, some profit taking may also be attributing to the post-earnings dip in Netflix stock as NFLX is still up more than +30% year to date and is sitting on monstrous gains of nearly +500% in the last three years.
This makes it a worthy topic of whether it's time to get in on the profit taking, buy the post-earnings dip, or hold Netflix stock.
Netflix’s Favorable Q2 Results
Exceeding earnings expectations, Netflix’s Q2 net income came in at $3.13 billion or $7.19 per share and above the Zacks EPS Consensus of $7.07. Year over year, Netflix’s Q2 EPS spiked 47% from $4.88 in Q2 2024. This came on Q2 sales of $11.07 billion, which increased 16% from the comparative quarter but slightly missed estimates of $11.08 billion.
Notably, Netflix’s operating margin during Q2 was 34.1%, up from 24% a year ago, with free cash flow soaring 91% to $2.3 billion.
Netflix’s Q2 Subscriber Growth
Although Netflix no longer reports official quarterly subscriber numbers, the streaming giant is thought to have added 5.1 million new net subscribers during Q2. However, this fell below many analysts' forecast of 6 million and was down from 8.05 million new net subscribers in Q2 2024.
Still, Netflix’s total subscribers have risen to over 300 million thanks to its global reach, strong content pipeline, and the growth of its more affordable ad-tier, keeping the company firmly ahead ofDisney’s streaming services and other platforms such as Amazon’s Prime Video and Paramount Global.
Netflix's Revenue Guidance & Margin Outlook
Optimistically, Netflix raised its full-year 2025 revenue guidance to $44.8-$45.2 billion from its previous forecast of $43.5-$44.5 billion. The current Zacks Consensus calls for Netflix’s top line to expand 14% this year to $44.55 billion, with fiscal 2026 sales projected to increase another 12% to $50.05 billion.
It’s also noteworthy that Netflix slightly increased its full-year operating margin guidance from 29% to 29.5%, although many analysts were looking for a margin range between 30-31%.
Monitoring Netflix’s P/E Valuation
What may have dampened excitement for Netflix’s favorable Q2 report is that at 50X forward earnings, NFLX does trade at a noticeable premium to the broader market, with the S&P 500 at 24X. This is also well above Disney and Paramount at 21X and 9X forward earnings, respectively, and even Amazon at 35X.
Bottom Line
For now, Netflix stock lands a Zacks Rank #3 (Hold). Enthusiasm for Netflix’s growth expectations appears to be already priced into its stock, as investors may have been looking for more exceptional upside surprises in its Q2 results.
That said, holding NFLX in the portfolio is still worthwhile considering Netflix’s market dominance, as more than 20% EPS growth is in the forecast for FY25 and FY26, and should help the streaming king grow into its somewhat stretched P/E valuation.
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Periodand min./max. price, $	Price change, %		Volatility, %		Volume, $
Periodand min./max. price, $	NFLX	Industry	NFLX	Industry	Volume, $
Yesterday 1,251.0 - 1,271.0	4.35	0.96	24.64	0.70	370.72M
Week 1,231.3 - 1,289.6	3.34	4.50	3.27	4.16	10.49B
Month 1,212.2 - 1,341.2	8.61	13.67	6.68	9.73	36.28B
3 Months 949.2 - 1,341.2	34.86	13.32	11.49	17.90	122.78B
6 Months 821.1 - 1,341.2	52.92	11.74	19.80	26.49	273.74B
Year 587.0 - 1,341.2	98.94	40.22	32.37	34.47	406.30B
3 years 174.6 - 1,341.2	649.85	25.86	66.57	83.49	1.12T
5 years 162.7 - 1,341.2	150.07	115.33	98.75	104.69	1.83T
All time 0.3 - 773.0	65,668.26	199.05	—	—	1.78T

Netflix, Inc.

Price and volatility history

Risk ratios