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Today’s editorial pick for you

Why ROKU Stock May Be the Catch-Up Trade to Netflix

Posted On Dec 11, 2025 by Chris Markoch

Shares of Roku Inc. (NASDAQ: ROKU) hit a 52-week high on December 11, 2025. ROKU stock jumped over 4.8% after news of a bullish upgrade from Jefferies. The analyst firm raised ROKU stock from a Hold to a Buy and increased its price target to $135 from $100.

Table of Contents

• Roku is a Play on the Evolution of Streaming
• Revenue Growth and Profitability Momentum
• Scale and Household Reach: 90 Million Reasons to Care
• AI-Powered Ad Targeting: A New Era for the Platform
• The Amazon Deal: Expanding Strategic Footprint
• Netflix Comparison: The Valuation Gap
• The Catch-Up Trade Thesis

This sets the stage for ROKU stock to climb 16% above the current consensus price target. That would build on the stock’s gain of over 48% in 2025, which is better than that of Netflix Inc. (NASDAQ: NFLX) stock and suggests why this catch-up trade may continue.

Roku is a Play on the Evolution of Streaming

For much of the streaming era, Netflix was the obvious choice for investors searching for exposure to the digital entertainment revolution. The company’s singular vision of global dominance and early shift to original content made it synonymous with streaming. 

But as the sector evolves, new contenders are emerging with differentiated business models and faster growth trajectories. As the price action in its stock shows, Roku is one of the most compelling options. It’s a company that’s transitioning from a hardware maker into a profitable, AI-driven advertising platform with a reach that rivals the biggest names in entertainment.

The thesis is straightforward: Roku is entering a profitability and growth phase that Netflix experienced years ago, but at a fraction of the valuation. As the ad-supported streaming landscape matures, ROKU stock could be the “catch-up trade” for investors who missed Netflix’s early run.

Revenue Growth and Profitability Momentum

Roku entered 2025 with one of its strongest financial showings in years. Following a challenging post-pandemic adjustment period marked by slowing hardware demand and advertising pullbacks, the company reported robust year-over-year revenue growth, driven by a resurgence in digital ad spending and strong platform engagement.

Importantly, Roku has transitioned into consistent profitability. Achieving this milestone changes the company’s investment profile. For years, investors viewed it as a promising but volatile growth story. Now, it’s demonstrating operating leverage: advertising and platform revenue growth is outpacing costs, while its fixed hardware base provides a wide funnel for ongoing monetization.

Roku’s current turn toward sustained earnings marks a fundamental inflection point. Its profit growth trajectory today mirrors where Netflix was in its early streaming years. This suggests meaningful upside for ROKU stock as margins expand and investors apply a more “platform premium” valuation to the stock.

Scale and Household Reach: 90 Million Reasons to Care

Roku’s presence in over 90 million households gives it a scale that shouldn’t be underestimated. Each Roku device or TV is effectively a gateway into the living room — a data-rich, ad-monetizable interface. That reach rivals major cable operators and even some of the largest streaming apps in aggregate.

This level of hardware and software penetration makes Roku one of the most attractive digital advertising platforms in media. It sits at the intersection of content consumption, data analytics, and commerce — three areas advertisers are eager to converge in an increasingly fragmented streaming world. With dozens of platforms competing for viewership, Roku provides an aggregation point that enables marketers to find and target audiences efficiently.

In essence, Roku controls the distribution real estate of streaming, not just the content. That structural advantage could make it as integral to the streaming ecosystem as iOS and Android are to mobile.

AI-Powered Ad Targeting: A New Era for the Platform

If Roku’s scale is the opportunity, its use of artificial intelligence is the lever that turns it into an engine of profitable growth.

In 2025, Roku has deployed advanced AI models to analyze viewing behavior, contextual signals, and engagement patterns to deliver more precise, performance-based advertising. Similar to how Meta transformed Instagram’s ad model through machine learning optimization, Roku is refining how ads are delivered and measured on its platform.

This is particularly powerful in a post-cookie environment. Advertisers are shifting budgets from broad-based digital campaigns toward targeted video ads that measure conversions directly on connected TVs. Roku’s AI-driven ad stack, informed by first-party data from tens of millions of active users, positions it squarely in this secular growth trend.

As brands demand better ROI and measurability, Roku’s AI-based ad platform could command increasingly premium pricing — a shift that mirrors how programmatic advertising reshaped web media in the 2010s.

The Amazon Deal: Expanding Strategic Footprint

Roku’s recent partnership with Amazon adds an intriguing new layer to the story. While details remain fluid, the collaboration signals a potential alignment between two streaming powerhouses that historically competed for connected-TV real estate.

At a high level, the Amazon deal underscores Roku’s growing relevance as an infrastructure and distribution partner rather than simply a rival. Whether it centers around content sharing, device integration, or advertising exchange, such a collaboration broadens Roku’s ecosystem reach and could help it tap into Amazon’s large advertiser and e-commerce base.

Strategically, it’s a validation moment — confirming that Roku’s platform has matured enough to be seen as complementary rather than competitive by major tech incumbents. For investors, it reduces headline risk and increases the company’s opportunity set across both advertising and commerce-embedded content.

Netflix Comparison: The Valuation Gap

Netflix remains the gold standard for a pure-play streaming investment — and its 2025 stock split has revived retail investor enthusiasm. Lower nominal prices may make it seem “cheaper” at first glance, but the company’s valuation still embeds years of high-margin growth and subscriber expansion assumptions.

ROKU stock, by contrast, trades at a far more reasonable multiple despite faster top-line growth and a newly established profit base. If Netflix represents the mature phase of the streaming cycle, Roku represents the platform phase — the infrastructure behind the viewers, where advertisers and aggregators consolidate value.

Here’s how the contrast shakes out:Metric (2025E)Netflix (NFLX)Roku (ROKU)Revenue Growth (YoY)~10%20–25%Operating Margin25%+~8% (rising)Households/Reach~280M subs90M devicesValuation (P/S)7.0x+3.0x–3.5xProfitability MomentumMature, stableAccelerating

The takeaway: while Netflix offers consistency, Roku offers acceleration. For investors looking for “earnings momentum beta” — the kind of multiple expansion that accompanies new profitability phases — ROKU stock looks more attractive over a 12–24 month horizon.

The Catch-Up Trade Thesis

In every market cycle, leadership rotates. What was once a disruptor becomes the incumbent; what was once speculative becomes proven. Roku is now standing where Netflix did nearly a decade ago — transforming from a household brand into a scalable platform business with multiple levers for profit growth.

The streaming ecosystem is also evolving in Roku’s favor. As advertisers prioritize performance and attribution over raw audience size, and as viewers shift toward ad-supported models, Roku’s position as the aggregator of streaming chaos becomes more valuable.

Combine that with improved margins, AI-driven ad monetization, and growing strategic partnerships, and the setup for a catch-up trade becomes compelling: Roku is executing, profitable, and still trading below fair value relative to its growth.

For investors seeking exposure to the next phase of streaming growth — one that leverages data, technology, and advertising intelligence rather than content spending — ROKU stock may be the smarter bet.

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