Improving Netflix’s Stock Performance with a New Strategy: Why Artificial Intelligence Isn’t the Answer

Netflix’s stock has been on a bit of a rollercoaster lately, with its worst losing streak in recent memory and a 13% dip for the year. Back in 2022, the company faced a rough patch, losing subscribers for the first time in a decade during a tech selloff that hit them hard. But things turned around with some key decisions in 2023, like introducing an ad-supported plan and cracking down on password sharing. These moves helped Netflix gain almost 100 million new subscribers by 2025, bringing their total count to over 300 million.

While these changes worked wonders for a while, the stock has been underperforming in 2026. The excitement from the password-sharing crackdown might be wearing off, and there’s a leadership transition happening as well. Amidst all this, investors are eyeing companies that excel in artificial intelligence (AI), with Netflix also throwing its hat in the ring. The company has been using AI to enhance its recommendation and content discovery features, as well as improving its ad business with personalized ads.

Will AI be the saving grace for Netflix? While it’s certainly a step in the right direction, it might not be the magic bullet the company needs to reignite its stock price. Regardless, Netflix remains an attractive investment opportunity with a forward P/E ratio of just over 23x. The company is poised for double-digit revenue growth, expanding margins, and promising bottom-line growth in the long run. Analysts are also optimistic, with a mean target price of $115.63, almost 42% higher than current levels. So, while AI is exciting, Netflix might need a new story to truly win over the markets.