Long-Form vs. Short-Form: The AI Debate That Misses Netflix’s Real Strength

I’ve been investing in Netflix for almost 20 years and I own it right now. So when Nuveen says to “avoid software stocks” and favor companies like Netflix because they have “more of a moat and are protected against AI,” I have opinions. Strong ones.

There Is No Such Thing as AI Protection

Netflix (NASDAQ:NFLX | NFLX Price Prediction) is up 8.8% year-to-date while Microsoft (NASDAQ:MSFT) is down 22.7% year-to-date. The performance gap is real. But the reason Nuveen gives for preferring Netflix is the wrong one entirely.

The Nuveen argument is that AI will impact short-form content more than Netflix because Netflix traffics in long-form. That sounds intuitive, but the data tells a different story.

Screen time is screen time. Attention is the scarce resource, and every platform: TikTok, YouTube, Netflix, every AI-generated content feed that doesn’t exist yet, is competing for the same finite hours in a human day.

Meta Platforms (NASDAQ:META) reported 3.58 billion family daily active people in Q4 2025, with ad impressions up 18% year-over-year. People watch hours of content, ten seconds at a time. The format does not insulate you from the competition for eyeballs. It just changes the shape of the competition.

Netflix knows this very well. In March 2026, Netflix moved to pay as much as $600 million for Ben Affleck’s AI production company. Acquiring an AI company for $600 million is a declaration that AI is central to Netflix’s future. Netflix is becoming an AI company, which is exactly the right move.

The Real Reason to Own Netflix

While I disagree with the reasoning, I do agree with the conclusion.

Netflix’s fundamentals are genuinely compelling. Paid subscribers exceeded 325 million. Ad revenue more than doubled in 2025 to over $1.5 billion. Free cash flow hit $9.46 billion for full-year 2025, with 2026 guidance of approximately $11 billion. The company is targeting a 31.5% operating margin in 2026, up from 29.5%.

That is a business worth owning. But the moat is not immunity from AI. The moat is brand, pricing power, content scale, and, critically, the fact that Netflix is actively deploying AI across subtitle localization, ad creative tools, and content recommendations. It is leaning in, not hiding.

The Nuveen framing confuses brand loyalty with technological immunity, and that distinction matters for how the thesis holds up over time. You should own Netflix if you believe it will successfully become an AI-native entertainment company. If your thesis is that it gets a free pass because AI only eats short-form video, that thesis will not age well.