Amazon AMZN and Netflix NFLX are among the most influential names in streaming entertainment. Netflix is a pure-play streamer serving an audience approaching one billion people, while Amazon’s Prime Video sits within a broader ecosystem spanning e-commerce, advertising and Amazon Web Services (“AWS”).
Both companies are leaning on live sports, ad-supported offerings and originals to capture viewers heading into the 2026 holiday season. With fresh third-quarter 2026 results and guidance just out, the comparison is especially timely.
Let’s delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for AMZN Stock
Amazon’s entertainment push is backed by a diversified profit engine. Thursday Night Football’s fifth season on Prime Video averaged 17.7 million viewers through six games, its best start ever, while the second season of NBA on Prime drew more than two million U.S. viewers for its opening doubleheader. Season Four of Reacher attracted 66 million global viewers in its first 28 days, and Amazon MGM Studios has crossed $1.2 billion in global box office so far in 2026.
The holiday lineup is packed, featuring The Greatest on Nov. 4, The Rings of Power Season 3 on Nov. 11, Madden on Nov. 18 and Blade Runner 2099 on Nov. 25, alongside Black Friday Football and NBA doubleheaders that carry live sports into early 2027.
Amazon is also sharpening monetization. The newly launched Amazon Ads Agent brings streaming TV into AI-driven Full-Funnel Campaigns, while Alexa+ became free for U.S. customers with compatible Fire TV devices. For the fourth quarter of 2026, Amazon expects net sales of $240-$247 billion, up 12-16%, operating income of $28.5-$33.5 billion and high-teens advertising revenue growth. Management projects AWS growth above 40% in both 2027 and 2028, while Amazon Leo remains on track to begin initial service this year.
Challenges persist. Heavy AI spending, with 2026 capital expenditures of roughly $220 billion, pushed trailing 12-month free cash flow to an outflow of $42.4 billion. Competition in streaming from rivals, including Netflix, also remains intense. Still, AWS and advertising cash flows give Amazon ample room to keep funding content.
The Zacks Consensus Estimate for AMZN’s 2026 earnings is pegged at $12.69 per share, indicating an 76.99% increase from the figure reported in the year-ago quarter.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
The Case for NFLX Stock
Netflix expects 2026 revenues of $51.1 billion, up 13%, and an operating margin of 31.5%, up from 29.5% in 2025, implying operating income growth of more than 20%. For the fourth quarter, it projects revenues of $13.4 billion, up 12%, and an operating margin of 26%, which includes a roughly 120-basis-point hit from recently announced headcount reductions. Churn improved year over year and was better than forecast, and member response to 2026 price changes was in line with expectations.
The holiday slate includes The Further Mis-Adventures of Cliff Booth, The Murder of JonBenét Ramsey , the final season of Emily in Paris, Lupin: Part 4 and the animated film Ray Gunn . Netflix’s biggest quarterly live lineup features the NFL’s inaugural Thanksgiving Eve game, a Christmas Day doubleheader and the Tyson Fury vs. Anthony Joshua fight. In early 2027, the ad tier expands to new markets, with the first tranche of launches scheduled for March.
October brought upgrades to the Netflix Ads Suite and a content partnership with Hoichoi, adding to licensing deals with Disney and TF1 that broaden its third-party catalog.
However, Netflix now expects 2026 ad revenues of about $2.7 billion compared with roughly $3 billion earlier, citing a slower rollout of some ad capabilities. Its 2026 free cash flow forecast was trimmed to about $12 billion from $12.5 billion. Management acknowledged investor concern over view-hour growth. Record buybacks of $4.8 billion in the third quarter support per-share earnings, but Netflix’s pure-play model concentrates risk on a single revenue engine.
The Zacks Consensus Estimate for NFLX’s 2026 earnings is pegged at $3.59 per share, indicating an 41.9% increase from the figure reported in the year-ago quarter.
Netflix, Inc. Price and Consensus
Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote
Valuation and Price Performance Comparison
Both AMZN and NFLX currently trade at premium valuations. AMZN trades at a forward 12-month price/earnings of 22.19X, while NFLX trades at 16.69X. Investors should track AMZN despite its premium, as its higher multiple is supported by diversified growth from AWS, advertising and Prime Video, while NFLX holders should hold or wait, given its trimmed ad revenue and free cash flow outlook.
AMZN vs. NFLX: P/E F12M Ratio
Image Source: Zacks Investment Research
On price performance, AMZN shares have returned 5.6% year to date, while NFLX shares have plunged 33.8%. AMZN’s positive momentum, against NFLX’s steep year-to-date slide, signals stronger investor confidence and makes AMZN the better buy for investors now.
AMZN Outperforms NFLX Year to Date
Image Source: Zacks Investment Research
Conclusion
Amazon holds an edge over Netflix as an entertainment play because Prime Video is embedded in a far broader, more resilient ecosystem. Record Thursday Night Football viewership, NBA on Prime, a packed holiday slate and AI-driven ad tools strengthen engagement, while AWS growth guidance above 40% for 2027 and 2028 funds content without straining the core business. Netflix’s solid margins, buybacks and live events are offset by lowered ad revenue and free cash flow expectations and view-hour concerns. AMZN offers better upside potential, so investors should track and hold AMZN while waiting for a better entry point in NFLX stock. AMZN and NFLX currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).