Should You be Confident in Netflix’s (NFLX) Long-Term Growth Potential?

ClearBridge Investments, an investment management company, released its “ClearBridge Large Cap Growth Strategy” second quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the growth stocks rebounded from tariff uncertainty, with technology and communication services sectors leading in the return to a risk-on environment. The S&P 500 Index returned 10.9% in the quarter, while the technology-heavy NASDAQ Composite soared 17.7%. The benchmark, the Russell 1000 Growth Index, rose 17.8% in the quarter, outperforming the Russell 1000 Value Index. Against this backdrop, the strategy underperformed its benchmark in the second quarter. IT and communication services sectors contributed to the performance while the health care sector detracted. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, ClearBridge Large Cap Growth Strategy highlighted stocks such as Netflix, Inc. (NASDAQ:NFLX). Incorporated in 1997, Netflix, Inc. (NASDAQ:NFLX) is a streaming platform. The one-month return of Netflix, Inc. (NASDAQ:NFLX) was 4.49%, and its shares gained 87.82% of their value over the last 52 weeks. On July 3, 2025, Netflix, Inc. (NASDAQ:NFLX) stock closed at $1,297.18 per share, with a market capitalization of $552.042 billion.

ClearBridge Large Cap Growth Strategy stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its second quarter 2025 investor letter:

“Netflix, Inc. (NASDAQ:NFLX), one of the Strategy’s largest active weights, saw its shares rise due to overall continued robust execution with double-digit revenue growth, driven by a balance of subscriber growth and price, and continued margin expansion. We took some profits in the position but remain confident in the company’s long-term strategy, strong market position and attractiveness of the global streaming market.”

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A home theater with family members enjoying streaming content together.

Netflix, Inc. (NASDAQ:NFLX) is in 14th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 150 hedge fund portfolios held Netflix, Inc. (NASDAQ:NFLX) at the end of the first quarter, compared to 144 in the fourth quarter.  While we acknowledge the potential of Netflix, Inc. (NASDAQ:NFLX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Netflix, Inc. (NASDAQ:NFLX) and shared the list of best big name stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of NFLX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.