Meta vs. Netflix: One of These Stocks Will Double — and One Will Disappoint

I’m of the view the stock market is becoming much more bifurcated. Stock pickers may outperform in such an environment, with investors seemingly paying closer attention to fundamentals than I’ve seen in some time. 

With that in mind, I thought I’d compare and contrast two of the top Magnificent 7 stocks, to determine which may be the better pick for long-term investors. Let’s dive into whether Meta Platforms (NASDAQ:META | META Price Prediction) or Netflix (NASDAQ:NFLX) will come out on top as the company that has double-up potential from here. 

Meta Platforms (META)

Meta Platforms’ latest results underscore what long‑term investors should really care about. This is a company with one of the most dominant online followings, capturing nearly half of the world’s eyeballs on a daily basis on one of its core social media platforms. With an incredible ads franchise driving impressive margins (which have continued to improve thanks to Meta’s focus on efficiency), Meta’s status as a cash cow can’t be ignored.

Now, that’s not to say this isn’t a company without its fair share of headwinds. Outside of the macro climate, the company’s launch of four AI chips didn’t resonate with investors this past week. Additionally, other reports that Meta is delaying its next-generation large-language model (Avocado) sent shares lower, given how much the social media giant has spent (expected to spend well more than $100 billion this year on these ambitions). And to cap off concerns, billionaire investor Stanley Druckenmiller announced he’s exited his position in Meta, furthering concerns among investors on Main Street.

My view on Meta remains bullish, despite these concerns. I think Meta’s revenue growth rate (which has been north of 20%) should continue, and margins should expand as a result of the company’s push to develop its own chips. Over the long-term, I think these are solid investments, and those who have the willingness and ability to be patient with this period of time could be well rewarded.

Yes, Reality Labs and AI spending levels are very high, and will likely provide near-term headwinds. That said, over the long-term, I think these will ultimately turn out to be solid investments in productivity and efficiency, which investors will clearly benefit from. 

Netflix (NFLX)

Netflix is the streaming giant that really requires no introduction. The company has successfully reinvented its growth algorithm, shifting from a pure subscription story to a more diversified model anchored by an ad‑supported tier, paid sharing, and selective pushes into live events, sports, and gaming. The ad tier is the headline driver right now. Indeed, ad‑supported viewing already makes up a substantial share of total hours, with ad‑tier subscribers growing north of 50% year‑over‑year and advertising revenue projected to exceed $3 billion in 2025. That is high‑margin, scalable revenue layered on top of a still‑expanding global subscriber base.

Now, that’s not to say there aren’t risks with owning Netflix stock here. The company is trading at a forward price-earnings ratio of more than 30-times, and also 9-times sales. Those multiples are reserved for only the best of the best stocks, which I’d argue Netflix should be a part of. 

That said, with the company recently pulling back from its WarnerBros deal, and recently inking a deal to acquire Ben Affleck’s AI film company InterPositive, the expectation is that further job cuts could be on the horizon. Such moves could enhance productivity and efficiency, and lead to further gains – that’s the bull case here. 

I think Netflix will continue to be able to leverage AI more than most of its Magnificent 7 peers, but the question is about what kind of future return investors will see from these investments. Right now, the jury is out on this stock.

Accordingly, it’s my view that between the two, Netflix is more likely to “disappoint” relative to lofty growth expectations simply because the law of large numbers and intensifying competition cap its upside, even as it remains a fundamentally sound hold‑forever media name.