Netflix (NFLX) has experienced a sharp decline in stock value following the all-time highs it made around $690 per share in October 2021 for a variety of reasons…
But I believe the worst is behind us and view NFLX as a lucrative investment opportunity today.
In fact, I just personally upgraded my NFLX stock rating from neutral to outperform.
And the primary reason for that is the company’s utilization of Artificial Intelligence (AI)…
Netflix uses AI extensively across various facets of its streaming services to enhance user experience, optimize content delivery, and improve its overall business model.
The company is at the forefront of streaming technology development, optimizing its service for seamless viewing experiences across diverse devices and network conditions.
Here’s how Netflix is leveraging AI to grow its stock price and why I project a substantial rise in the coming 12-18 months with an aggressive $700 price target that would mean new all-time highs for the stock:
1. Personalization and Recommendation Systems:
- Content Recommendations: Netflix uses AI-driven algorithms to analyze user behavior, preferences, and viewing history to recommend content that is most relevant to individual users. This personalization helps in retaining users by providing them with a tailored viewing experience.
- Thumbnails Personalization: AI is also used to personalize the thumbnails of shows and movies displayed to users, choosing images based on what is likely to be most appealing to the individual user.
2. Content Creation and Optimization:
- Script Analysis: AI analyzes scripts to predict the success of content even before it is produced. It helps in making decisions about which shows and movies to produce by assessing factors like genre, plot structure, and possibly even actor performance.
- Content Enhancement: AI algorithms are employed to enhance the quality of content by optimizing color, sound, and video encoding, ensuring optimal viewing experiences across different devices and network conditions.
3. User Interaction and Engagement:
- Chatbots and Customer Service: Netflix uses AI-powered chatbots to interact with users, answer queries, and resolve issues, providing efficient customer service.
- User Engagement Analysis: AI analyzes user interactions, clicks, and watch times to understand user engagement levels with different content, helping in refining content recommendations and marketing strategies.
4. Demand Forecasting and Resource Allocation:
- Viewership Prediction: AI models predict the expected viewership of new releases, helping in allocating resources and marketing efforts effectively.
- Resource Optimization: AI helps in optimizing the allocation of resources like bandwidth and storage, especially in content delivery networks, ensuring smooth and high-quality streaming experiences for users.
5. Fraud Detection and Security:
- Account Security: AI is instrumental in detecting and preventing unauthorized access and fraudulent activities on user accounts.
- Content Security: AI-driven security measures protect intellectual property and content from piracy and unauthorized distribution.
6. Marketing and User Acquisition:
- Targeted Advertising: AI analyzes user data to create targeted advertising and promotional campaigns, optimizing user acquisition and retention efforts.
- Subscription Optimization: AI models analyze user behavior to optimize subscription plans and pricing strategies, maximizing revenue and user satisfaction.
Conclusion:
Netflix’s utilization of AI is multifaceted and integral to its success.
From enhancing user experiences through personalized recommendations to optimizing content creation and delivery, AI plays a pivotal role in Netflix’s ability to retain its competitive edge in the streaming service industry.
The continuous advancements in AI technologies further provide Netflix with opportunities to innovate and refine its services, ensuring sustained growth and user satisfaction.
And ultimately, I believe that could send shares to new all-time highs over $700 per share.
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You've probably read about NVIDIA's recent earnings blowout…
Where it revealed that thanks to demand for AI, its future earnings will crush previous expectations.
The markets reacted by sending NVIDIA's stock surging by almost 25% in a single day…
An impressive feat when you consider it was already a $700+ billion stock before that surge.
If you already owned NVIDIA stock before the jump – congratulations…
But if you didn't, don't worry…
I believe this small-cap stock could deliver Huge returns in 2024 – which would be 300 times better than NVIDIA's 25% surge.
