Here’s the thing about Netflix that Wall Street doesn’t want to talk about: it’s trading at 38X earnings while everyone’s giving it a “Buy” rating. That’s twice what Disney charges. Sure, the stock popped 30% last week, but let’s pump the brakes for a second.
The real issue isn’t Netflix’s current dominance—it’s what happens when AI gets *really* good at making content.
Think about Netflix’s entire business model. They spend billions creating shows and movies, then charge you $17.99 a month to watch them. It’s a beautiful moat… until it isn’t. What happens when your laptop can generate feature-length films on demand? When AI can write scripts, cast deepfaked actors, and iterate until it creates something your own AI judges as “nearly perfect”?
Some people say “AI video is garbage right now.” Fair point. But remember when everyone said the same thing about AI language models? And image generators? Yeah, those evolved pretty fast.
Here’s the kicker: AI companies have access to literally every movie and TV show ever made, plus billions of online reviews and comments about what makes content good. Give them enough computing power—and Big Tech is throwing money at that problem like it’s going out of style—and you’ve got a machine that can generate infinite content variations, test them, and keep the winners.
Netflix isn’t alone in this vulnerability. Any company that makes digital products and sells them on subscription is basically a sitting duck. Law firms are already using AI to review contracts. Hospitals are deploying cancer-detecting AI that matches or beats human radiologists. Accounting firms are replacing entry-level auditors with AI tools. The pattern is clear: if your job is knowledge work, AI is coming for it.
The scary part? We’re only missing three things before AI becomes a full-fledged company:
1. **Better models** – AI companies are crushing this one
2. **More computing power** – Big Tech is building it as fast as they can
3. **Light regulation** – The U.S. government is basically waving it through
So what’s an investor supposed to do? Stop chasing the sexy streaming stocks and look at companies that *can’t* be disrupted by AI. Energy companies. Basic materials. Physical infrastructure. Boring stuff that requires actual humans doing actual work in the real world.
Netflix might keep printing money for a while. But at 38X earnings, you’re betting that AI won’t fundamentally change how people consume entertainment. That’s a bet I wouldn’t take.
The future belongs to companies that can survive the AI revolution, not the ones that look vulnerable to it. Netflix? It’s looking pretty vulnerable right now.