22 January 2025
If you are covering Netflix’s latest results or the announcement of Project Stargate by Donald Trump, please see the following comment from Ben Barringer, technology analyst at Quilter Cheviot:
Netflix
"Netflix's latest results have delivered a blockbuster performance, with the company exceeding expectations across the board. Analysts were anticipating 9 million new subscribers this quarter, but Netflix has blown past those projections, adding an impressive 18.9 million subscribers—more than double the estimate. This surge takes its global subscriber base to over 300 million, a significant milestone that underscores the platform's enduring appeal.
"A strong driver of this growth has been its focus on under-penetrated markets, where the potential for expansion remains vast. The ad-supported tier has also shown exceptional momentum, doubling in size in 2024 and again in 2025. This growth not only brings in new subscribers but also provides a robust revenue stream, complementing their core business model.
"The company has effectively navigated challenges such as foreign exchange headwinds, which are significant given that 60% of its revenue is generated outside the US. Despite this, margins have improved, reflecting operational efficiencies. The outlook for 2025 has been slightly raised, with revenue expected to grow by 12–14% in dollar terms, a notable achievement in the current economic climate.
"Revenue growth at mid-teen levels, coupled with a disciplined 6% increase in content production spend, highlights Netflix’s ability to balance expansion with cost control. Engagement metrics remain strong, boosted by high-profile events like the Tyson Paul fight and the NFL over Christmas, which have drawn significant viewership.
"Overall, this is an excellent set of results for Netflix, showcasing not just its ability to grow but to do so sustainably. With improving margins, a growing ad tier, and a strong global footprint, Netflix continues to cement its position as the leader in the streaming space.
Project Stargate
"Project Stargate marks a significant escalation in the AI arms race. Announced by Donald Trump, the initiative starts with an initial $100 billion investment, scaling to a staggering $500 billion. This ambitious project has equity backing from major players including SoftBank, OpenAI, Oracle, and MGX. It aims to build 20 cutting-edge data centres across the United States, leveraging technologies from leading firms such as NVIDIA, Microsoft, Arm, and OpenAI. Notably, 10 data centres are already under construction, signalling swift progress and a proactive approach.
"This development is undeniably a boon for the AI sector. Companies involved in supplying the technology and infrastructure for Project Stargate are well-positioned to benefit significantly. The move underscores the increasing strategic importance of AI innovation, further solidifying its role as a cornerstone of economic and technological advancement. For investors in the AI space, this announcement highlights a wealth of opportunities as the competition to dominate the sector intensifies."
