In this article, we will discuss the 12 Best Streaming Service Stocks to Buy According to Analysts.
The live streaming market size is expected to increase by US$20.64 billion, reflecting a CAGR of ~16.6% over 2024 and 2029, as per Technavio. The significant use of smartphones and constant internet connectivity allows users to easily stream content, resulting in market expansion. Furthermore, technological advancements such as AI and VR continue to enhance user experiences, further bolstering the market’s momentum.
Pivoting to Next-generation Streaming 2.0
After 4 years of experimentation among the legacy global diversified media companies, S&P Global believes that 2025 can be an inflection point in the broader industry’s multi-year transition to streaming from linear TV. The scaling of advertising on streaming is expected to be a critical component for growth in profitability. Most of the streaming services don’t have enough subscribers on ad-tiers to attract advertising dollars, mainly those advertising budgets that are departing linear TV, says the firm.
Mainly for 2025, the firm expects companies to announce international JVs and domestic bundling arrangements. Why? These strategies can help the scaling up of streaming services, manage operating expenses through sharing infrastructure costs (mainly in second-tier international markets), and reduce churn.
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Focusing on Quality and Not Quantity
As per BDO, media companies and those organizations providing streaming services have increased their content libraries in a bid to attract new customers. Over the past few years, several media companies and streaming providers focused on customer attraction, targeting to get as many new subscribers as possible. The streaming platforms continued to churn out new material, resulting in a content boom. Now, the companies are focused on prioritizing customer retention as they reassess the quality of their content to ensure that it addresses demand.
BDO expects that most major streaming platforms are expected to increase their spending on content by less than 10% over the upcoming few years. The broader streaming industry continues to invest in podcasts. However, since the podcast space remains crowded, differentiating new products is expected to remain critical in 2025 to fuel demand.
As the broader sector evolves, media companies and streaming platforms need to revamp their strategies to reap the benefits of opportunities and address challenges, like subscribers sharing credentials and customer retention. BDO opines that these companies are required to look for ways to improve revenues, either by increasing the service fees or adding ad-free tiers.
With this in mind, let us now have a look at the 12 Best Streaming Service Stocks to Buy According to Analysts.
A large flat-screen TV streaming video from a video hosting platform.
Our Methodology
To list the 12 Best Streaming Service Stocks to Buy According to Analysts, we sifted through several online rankings and chose companies catering to the broader streaming services sector. Next, we chose the ones that analysts view as Strong Buy stocks and see upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 14. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
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12 Best Streaming Service Stocks to Buy According to Analysts
12) Netflix, Inc. (NASDAQ:NFLX)
Average Upside Potential: 4%
Number of Hedge Fund Holders: 121
Netflix, Inc. (NASDAQ:NFLX) offers entertainment services. It provides television (TV) series, documentaries, feature films, and games throughout various genres and languages. The company has received a “Buy” rating from analyst Hamilton Faber at Redburn Atlantic, fueled by its advertising revenue. The analyst opines that the company possesses strong growth opportunities with its underutilized ad inventory as it strengthens its partnerships. Netflix, Inc. (NASDAQ:NFLX) gained 18.9 million new subscribers in Q4 2024, resulting in global paid memberships of 301.63 million, courtesy of the success of live sports events and some hit TV shows such as “Squid Game.”
Elsewhere, Bernstein mentioned that the Tyson-Paul fight, which was the most-streamed sporting event, led to a significant surge in new subscribers. Bernstein opines that Netflix, Inc. (NASDAQ:NFLX) has cemented its position as a credible platform for live events, thereby unlocking strong growth in advertising revenues. Similarly, Netflix, Inc. (NASDAQ:NFLX) plans to stream more live sports this year.
Also, the company has managed to secure exclusive US streaming rights for the 2027 and 2031 FIFA Women’s World Cup. For FY 2025, Netflix, Inc. (NASDAQ:NFLX) remains focused on further developing newer initiatives like live programming and games. With more than 300 million paid memberships (which excludes Extra Member accounts) and multiple people per household, the company has been entertaining a massive audience estimated at over 700 million.
11) Apple Inc. (NASDAQ:AAPL)
Average Upside Potential: 4%
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. The company caters to the streaming service industry through Apple TV+ (a subscription-based streaming service), Apple Music, and Apple News+, among others. Apple Inc. (NASDAQ:AAPL) offers digital content through subscription-based services, which forms part of its Services business. Analyst Aaron Rakers from Wells Fargo maintained a “Buy” rating on the company’s stock, providing a price target of $275.00.
As per the analyst, Apple Inc. (NASDAQ:AAPL)’s services segment has been performing robustly, with a strong momentum in paid subscriptions, resulting in a healthy revenue stream. CNBC reported that Apple TV+ is now available on Android devices as the company released its video streaming service for Google’s mobile computing platform. While more people have iPhones in the U.S., globally, Android has a 72% market share, mentioned CNBC while quoting Statcounter. Notably, releasing Android apps significantly enhances Apple Inc. (NASDAQ:AAPL)’s market.
The company’s bundling strategy, such as Apple One combining TV+, Arcade, Music, and iCloud) results in increasing user stickiness. Therefore, the more services a customer subscribes to, the more difficult it is to switch to alternatives. Tsai Capital, an investment management company, released its Q4 investor letter. Here is what the fund said:
“We initiated our investment in Apple Inc. (NASDAQ:AAPL) in 2016 and elevated it to a core holding in 2018, the same year the company introduced its redesigned 13-inch and 15-inch MacBook Pro models. Under Tim Cook’s visionary leadership, Apple has consistently redefined innovation in hardware and software.
The September 2024 launch of the iPhone 16, with its groundbreaking AI capabilities, including enhanced image generation tools, marks another inflection point. We believe this transformative device is the foundation for an AI-driven supercycle and could entice approximately 100 million consumers to upgrade, reinforcing Apple’s leadership in the industry.
Today, Apple’s ecosystem spans over two billion active devices, supported by a rapidly-growing base of subscription services. This strategy has helped to turbocharge customer engagement and spending. In the most recent fiscal year, which ended in September 2024, Apple’s high-margin services division accounted for 39.3% of total gross profits, up from 32.8% just two years ago.
Apple’s financial footing remains exceptional, with approximately $50 billion in net cash and marketable securities. Looking ahead, we expect earnings-per-share growth to outpace revenue growth, driven by margin expansion and continued share buybacks.”
10) Spotify Technology S.A. (NYSE:SPOT)
Average Upside Potential: 7.2%
Number of Hedge Fund Holders: 98
Spotify Technology S.A. (NYSE:SPOT) provides audio streaming subscription services. Phillip Securities analyst Helena Wang maintained a bullish stance on the company’s stock, providing a “Buy” rating. The rating is backed by the company achieving its first full year of profitability, with FY 2024 results surpassing expectations. Revenue went up by 16% YoY, thanks to an increase in monthly active users (MAUs) and premium subscribers, which exceeded Spotify Technology S.A. (NYSE:SPOT)’s guidance.
The company is anticipated to continue the positive trajectory through a strong focus on monetization strategies, like potential price increases and the roll-out of a new premium tier. As per the analyst, Spotify Technology S.A. (NYSE:SPOT) is an industry leader in audio streaming, possessing a strong subscriber base and pricing power, which strengthens the investment opportunity. The growth in streaming services fueled the demand for podcasts and audiobooks in which Spotify Technology S.A. (NYSE:SPOT) remains heavily invested.
The company’s acquisition of Anchor, Gimlet Media, and Megaphone allows it to monetize and distribute exclusive content. Rowan Street Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Spotify Technology S.A. (NYSE:SPOT): Investment Initiated: May 2018
Internal Rate of Return (IRR): 14%
IRR for Spotify, while solid, has been influenced by the timing and size of our investments. Over the past six years, the company has achieved exceptional growth in users, revenues, and gross profits-as highlighted in the chart below. However, our IRR does not fully reflect this growth due to the cash flows involved in building our position.
We began buying Spotify shares in 2018 at an initial cost basis of $135 per share but continued to add to the position over the years, ultimately raising our average cost basis to $216 per share. Had we maintained our initial cost basis, the IRR on this investment would have been closer to 22%, which better aligns with Spotify’s fundamental growth in key metrics such as Monthly Active Users (MAU), revenues, and gross profits…” (Click here to read the full text)