Netflix's advertising revenue is booming and could fuel strong earnings growth.
Take-Two Interactive's "Grand Theft Auto VI" release this fall could establish a new baseline in the company's revenue and profitability.
Alphabet's Gemini AI model is driving tremendous momentum across the entire business.
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Netflix (NASDAQ: NFLX) is widening its runway in a meaningful way thanks to its ad-supported subscription tier. The company has 325 million paid memberships, and management believes it's increasingly tapping into a global entertainment audience of nearly 1 billion people.
Cheaper ad-supported plans provide the company with a high-growth, profitable opportunity beyond subscriber acquisition. It helps attract more people who wouldn't pay the full membership price. That's already showing up in the numbers: Ad revenue more than doubled last year to $1.5 billion.
While ad revenue is a tiny slice of the company's $45 billion in annual revenue, management expects it to roughly double again to $3 billion in 2026. This will support the company's 2026 outlook of 12% to 14% growth in total revenue.
The reason this matters is that advertising is highly lucrative. Once Netflix builds out its adtech foundation, incremental ad dollars can scale faster than costs. That operating leverage explains why analysts expect earnings to grow around 22% annually over the next several years.
With the stock trading around a 32 forward price-to-earnings (P/E) multiple, Netflix doesn't need perfection to reward patient investors. If earnings compound anywhere near expectations, there's a realistic path for the stock to double by 2030.
Take-Two Interactive (NASDAQ: TTWO) is one of the top video game publishers, entertaining millions of players through popular franchises such as Grand Theft Auto and NBA 2K. The release of Grand Theft Auto VI, expected on Nov. 19, 2026, is a major growth opportunity for the company.
Management expects sales from the new version of this best-selling series to establish a new baseline for revenue and profitability. The last title has sold a cumulative 225 million copies since 2013, and this new release should power years of strong revenue through ongoing content updates and growth in GTA+ memberships.
That strategy is already working today. Ongoing player spending in existing games makes up 76% of Take-Two's business. This spending grew 23% year over year last quarter, indicating that Take-Two can profit from its titles for years after initial release.
And Grand Theft Auto isn't the only game in the company's pipeline. Take-Two has several releases in development that can broaden the business and reduce reliance on any single title.
At roughly a 26 forward P/E, the stock looks reasonably priced relative to analysts' expectations for about 36% annualized earnings growth in the years ahead. If Take-Two executes, the stock has a strong chance to outperform the market through 2030.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is already a big business, as reflected by its $3.9 trillion market capitalization. But its leadership in artificial intelligence (AI) and its ability to monetize this technology across business lines can fuel strong growth, helping investors beat the market.
Google says all 15 of its products with at least 500 million users now use its Gemini AI model. AI is driving more usage of Google Search than ever before. This is fueling strong growth, with revenue from Search and other services up 17% year over year last quarter.
Gemini, which has 750 million monthly users, can drive more subscriptions to Google One, which bundles AI features with other products. Google said revenue from subscriptions, platforms, and devices also grew 17% year over year last quarter.
On the enterprise side, Google Cloud grew 48% year over year last quarter with a $240 billion backlog, driven by demand for AI services. Cloud computing is now a $70 billion annual revenue business for the company.
The stock's forward P/E of 28 is reasonable for a business with billions of users across seven products, including Search. With analysts projecting roughly 15% annualized earnings growth, Google stock could double over the next five years and continue beating the market if AI-driven monetization continues to scale across its services.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Netflix, and Take-Two Interactive Software. The Motley Fool has a disclosure policy.