Why Netflix is a must-watch blue chip stock heading into 2025

Netflix, Inc. (NASDAQ:NFLX) is under consideration as one of the best blue chip stocks to purchase for 2025, given its significant market presence and recent performance.

Blue chip stocks appeal to both conservative and risk-tolerant investors due to their robust business models, strong reputations, and steady earnings, offering consistent dividends that promote stability during market fluctuations. In 2024, the S&P 500 increased by about 24%, primarily fueled by gains in seven major blue chip stocks known as the “Magnificent 7,” which contributed to a 13.7 percentage point increase. Investors who concentrated on these top-performing stocks witnessed substantial returns.

Analysts expect this trend to persist into 2025, as blue chip companies are poised to benefit significantly from anticipated Federal Reserve interest rate cuts and pro-business regulatory changes under the newly elected administration. David Miller, co-founder of Catalyst Funds, noted that “The Mag 7 stocks are generating significant growth in terms of revenue and earnings power,” emphasizing their dominant market positions and favorable economic conditions.

Valuations of blue chip stocks have soared following two years of strong gains, notably during the artificial intelligence boom. However, these companies maintain significant profits and competitive advantages to support their high valuations. Fitzgerald, a principal and founding member of Moisand Fitzgerald Tamayo, remarked, “The Magnificent Seven are not pie-in-the-sky companies: They’re generating tremendous revenue for investors.”

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Netflix, with a market capitalization of $374.03 billion as of January 8, 2025, posted a remarkable gain of 81% in 2024 and has attracted 121 hedge fund holders. The streaming giant has invested billions into original content, enhancing its library by partnering with high-profile stars and expanding its offerings to include live sports events, which has attracted a growing user base.

Currently, Netflix boasts over 283 million paid subscribers, contributing to a rapidly expanding revenue base. In a strategic move to diversify income streams, the company launched an advertising tier, which has led to an increase in paid subscriptions and attracted more advertisers to the platform. While management does not expect advertising to significantly boost revenue growth in 2025, this segment is beginning to scale quickly.

Netflix ranks second among the best blue chip stocks for 2025. While the company shows substantial investment potential, there is a belief that some deeply undervalued AI stocks may offer higher returns in a shorter timeframe. Investors are encouraged to consider these AI opportunities that trade at multiples less than five times their earnings.

Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

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