Netflix vs Alphabet: Who is the true choice for tech stocks?

Recently, Netflix's stock price has been a bit weak, but its performance is actually quite good—Q3 revenue was $11.5 billion, a year-on-year increase of 17%, and advertising revenue is expected to double by 2025. The problem is that Netflix is a bit one-dimensional, relying solely on streaming, and its content costs are quite high.

Alphabet is different. In the same Q3, revenue reached $102.3 billion, with a growth rate of 16%, but the sources of income are much more diversified: search, YouTube, cloud computing, and subscription services are all flourishing. Especially in cloud services, driven by AI, year-over-year growth has accelerated, with a backlog of orders surging by 46% quarter-over-quarter, reaching $155 billion.

The valuation aspect is the most interesting—Netflix's PE ratio is around 44, while Alphabet's is only 29. In other words, you get more earnings per dollar when you buy Alphabet, and importantly, this dollar comes from a more diverse range of business lines, along with AI being a new growth driver.

Conclusion? Alphabet seems to be the more reliable choice. While both companies have risks (Alphabet faces threats from AI search, and Netflix has to compete with major players), the valuations have already absorbed most of these risks.