For some reason or another, many of the big hedge funds still have faith in shares of The Walt Disney Company (NYSE:DIS | DIS Price Prediction), which have done next to nothing, gaining a mere 7%, in the last 10 years. Undoubtedly, Disney is a cherished American brand, and while there have been a number of headwinds that have worked against the firm in recent years, especially since the glory days of Disney+ during the peak of 2021, I do think there’s finally that top catalyst that investors can get behind.
Indeed, a powerful brand alone isn’t enough to power a comeback for the ages. With a new CEO, Josh D’Amaro, at the helm of the house of mouse, who brings a wealth of experience to the table, in addition to a three-pillar strategy to transform the company (a 10% growth rate could be more than realistic again) into a modern, even futuristic, version of itself, I can see why the smart money would want to increase their bets in the perennial underperformer.
Of course, shares of Disney have been held by more than a dozen big-league money managers for years now. But, more recently, the bull case for Disney got that much louder with D’Amaro in the corner office. Moving ahead, Disney+ as a “hub,” tech-enabled experiences, and content efficiency (don’t discount the game-changing potential of AI) seem like moves that can boost growth and take operating margins to the next level.
Physical AI and expanding Disney+ could be massive drivers
Indeed, I do think that the latest Disney plan is more than practical and could put Disney stock back on the map after trailing the market for a little more than a decade. Perhaps Disney could be one of the biggest beneficiaries of the rise of AI and agentic technology. In terms of physical AI and robotics, Disney’s parks stand out as a place to showcase such magic.
It’s quite amazing to think about what the Disneyland of the future could become. These days, the price of admission is steep, but, then again, perhaps there’s no happier place on Earth for fans of next-level experiences.
Either way, I think physical AI could warrant price increases at parks, which continue to be packed despite pressure facing everyday consumers. Apart from enriched experiences for guests, the big money could lie in the savings as robots take care of the work that needs to be done behind the scenes. Any way you look at it, Disney stands out as a huge winner from the rise of physical AI.
In the meantime, content efficiency and prioritizing Disney+ as more than just a video streaming platform (think gaming, vertical video, and more) seems like a timelier catalyst that I don’t think has been priced into the stock quite yet. If Disney+ is poised to turn into a more engaging entertainment super-app of sorts, it’s exciting to think about the magnitude of growth that could be around the corner.
AI for content production could be lucrative for a firm with all the great brands
Finally, AI-generated content could be the game-changer for Disney that helps shares find their way back to new highs, perhaps sooner rather than later. Of course, it’s not like Disney is going to tarnish its brand with “AI slop.”
Rather, the company appears to be proceeding with the technology deliberately. It’s being selective with how and where it uses AI. And with a focus on the human creativity aspect, I’d argue that Disney is the ultimate AI augmentation play.
As other firms focus on automation, Disney’s augmentation, I think, might be key to next-level efficiencies and growth. Does that mean there won’t be automation opportunities and cuts?
Definitely not. The firm recently cut 1,000 positions, but that’s nowhere near as sweeping as some of the layoffs elsewhere across the tech sector. The key here, I think, is that the cuts due to AI or anything else won’t run too deep.
In short, I like the path Disney is taking under D’Amaro. And while plenty of hedge funds were early to Disney, I do think that plan (and tech-savvy) hasn’t been this sound in a long time.
Top Gaining Stocks
Top Losing Stocks