Better Stock to Buy Now: Microsoft or Netflix?
The stickiness of Netflix has proven to be incredible. No matter what happens, it's always the one streaming service that viewers seem to return to or never cancel. This bodes well for long-term viability.
Microsoft is also an incredibly sticky company, as its software has powered businesses for years, but what happens if generative AI is an absolute flop and many of its largest clients fold in the next few years? That would leave Microsoft with a lot of computing power with no use and represent billions of wasted capital expenditures. I think the odds of that happening are low, but it's a concern that some investors have.
Overall, I think Microsoft is the better buy. However, if you're concerned about AI spending and don't believe Microsoft's approach to it is the best way, I don't think there's any problem with investing in Netflix. Prior to the original acquisition announcement, Netflix's stock traded for nearly $110 per share, so I wouldn't be surprised if that's where the stock ends up over the next few weeks as the market digests the news of its ditching the merger. But if the AI buildout lasts for multiple years and Microsoft's cloud computing business continues to grow alongside it, it has far more upside over the long term.
Should you buy stock in Microsoft right now?
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Keithen Drury has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft, Netflix, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
Better Stock to Buy Now: Microsoft or Netflix? was originally published by The Motley Fool
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