We recently published a list of 12 Best FAANG+ Stocks to Invest in Right Now. In this article, we are going to take a look at where Netflix, Inc. (NASDAQ:NFLX) stands against other best FAANG+ stocks to invest in right now.
The group of stocks formerly known as FAANG were synonymous with technological prowess, market dominance, and high growth. These companies provided exponential returns and offered the chance to be part of the technological revolution. Their rise to dominance was fueled by innovation, digital transformation, the increasing use of the internet, and their insatiable hunger for growth. In the process, they reshaped industries, altered consumer behavior, and redefined customer engagement. However, over the past couple of years, the acronym has lost some of its relevance as some names have changed and new companies have encroached on the territories of these mega-caps. As a result, the market has started using the term “Magnificent Seven” to better represent the most valuable tech stocks. In this list, we include the ‘Magnificent Seven’ plus five interesting stocks that focus on the transformational technology growth trends such as artificial intelligence, cloud computing, EV technology, and streaming.
Let’s begin by understanding the sheer magnitude of these stocks. We created an equal-weighted portfolio (equal investment in each stock) of all 12 mega-cap technology stocks in this list and compared their combined performance with the S&P 500 Index over the past 5 years. Astonishingly, the mega-caps portfolio has returned over 385% compared to the S&P 500 Index’s return of around 86%. Additionally, these 12 stocks now have a combined market cap of over $20.0 trillion, with around $14 trillion added in the past 5 years. In comparison, the total market cap of all US-listed stocks is approximately $60.5 trillion (as of December 2024; source: Wilshire 5000 Index), making these mega-caps account for nearly one-third of the total US market value. Although it’s not entirely fair to compare market caps to GDP, if we could, and if these 12 mega-caps formed a country, they would rival China as the second or third largest country by nominal GDP.
Despite recent intense competition, challenging market dynamics, and a difficult regulatory environment, these tech leaders still stand tall with their legacy of innovation and digital transformation. We believe their substantial investments in technology infrastructure, strategic acquisitions, international expansion, and continuous innovation have helped them maintain their dominance. Additionally, the rise of artificial intelligence and machine learning has opened new avenues for growth among these tech giants. With that, let’s explore these 12 stocks.
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Out Methodology
To identify the 10 best FAANG+ stocks, we compiled a list of U.S.-listed technology companies with largest market capitalization, along with the stocks from the FAANG acronym. Ultimately, the stocks were ranked in ascending order based on their market capitalization, with the stock having the highest market capitalization ranked at the top.
Note: All pricing data is as of market close on January 31.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Netflix, Inc. (NASDAQ:NFLX)
Number of hedge funds: 121
The advent of Netflix, Inc. (NASDAQ:NFLX) revolutionized digital streaming and disrupted traditional TV and movie consumption. As a global streaming entertainment service, Netflix offers a diverse array of movies, TV shows, games, and more, with unlimited viewing on internet-connected devices. With over 300 million paid memberships in more than 190 countries, Netflix, Inc. (NASDAQ:NFLX) has solidified its position as a dominant player in the entertainment industry, continually innovating its content offerings and user experience. Its market cap currently stands at $418 billion, up from $148 billion five years ago.
Netflix, Inc. (NASDAQ:NFLX) has been intensifying efforts to expand its content library, including original content, and enhance user engagement through original programming and strategic partnerships. The company has invested substantially in creating exclusive content, significantly contributing to subscriber growth. Moreover, Netflix, Inc. (NASDAQ:NFLX) is exploring new revenue streams, such as ad-supported subscription tiers and gaming, aiming to attract a broader audience and increase overall revenue. According to company management, there are over 750 million broadband households (excluding China and Russia) and more than $650 billion of entertainment revenue globally, of which the company captured only about 6% in 2024, leaving a vast addressable opportunity.
In January 2025, Netflix, Inc. (NASDAQ:NFLX) reported strong Q4 2024 earnings that exceeded analyst expectations. For the quarter, the company added 18.9 million paid streaming customers, more than double what analysts had projected. Management also raised its revenue growth guidance to 12%-14% year-on-year and increased its operating margin guidance to 29% from the previous 28%.
Analysts’ views on Netflix, Inc. (NASDAQ:NFLX) have broadly turned positive following these results. The stock was upgraded by a Bernstein analyst to Outperform from Market Perform, with a price target raised from $975 to $1,200. The analyst believes international growth could enable the company to achieve double-digit subscriber growth in 2025 and highlighted that numerous markets remain underpenetrated. Netflix’s growth initiatives, such as the ad-tier, could support substantial user growth. Conversely, Phillip Securities raised the price target to $870 from $695 but downgraded the stock to Reduce from Neutral, citing valuation concerns.
Overall, NFLX ranks 10th on our list of best FAANG+ stocks to invest in right now. While we acknowledge the potential of NFLX to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
