Jim Cramer on Roku: "That's Where the Advertisers Want to Be"

Roku, Inc. (NASDAQ:ROKU) is one of the stocks Jim Cramer shed light on. A caller inquired after Cramer’s thoughts on the stock, and he replied:

“I like it, okay? It’s got a lot of… positive chatter about the numbers. It’s just been going up, up, and up, and I think it makes sense because that’s where the advertisers want to be.”

Roku, Inc. (NASDAQ:ROKU) provides a TV streaming platform that lets users access shows, movies, news, and sports. Additionally, the company sells streaming devices, smart TVs, audio products, and provides digital advertising services. RGA Investment Advisors stated the following regarding Roku, Inc. (NASDAQ:ROKU) in its second quarter 2025 investor letter:

“Roku, Inc. (NASDAQ:ROKU) has been a wild ride for us. We first bought shares in late 2018, sold a few times along the way, but held onto a sizable position throughout the rollercoaster. We certainly learned some lessons about ourselves and our willingness to hold high valuations in order to spread a sizable tax hit over years (note: we will never tax derange ourselves into holdings through a valuation grind down again, as the market has a wicked way of reducing tax obligations as you wait). During the tariff crash, we meaningfully increased our position yet again.

Throughout the stock’s ascent, bears argued that Roku would rapidly lose market share to competition from Amazon and Google–well capitalized, formidable competitors. These bears were right, but for the wrong reasons. Roku has actually increased its device and household share now covering over half of all households in the US; however, the company stalled in pushing ARPU due to a confluence of forces, many of which stemmed from a strategic, but reversible decision. Roku was trying to build a walled garden, leveraging their unique and proprietary customer data to pull advertisers into their own Demand-Side Platform (or DSP). Unfortunately for Roku, advertisers had paths to reach Roku’s audience while working around the walled garden. For example, an advertiser could buy ads on Hulu, through a DSP like The Trade Desk and in doing so, avoid sharing a dime with Roku. This happened alongside a pullback in content companies chasing new audiences. During the pandemic, Roku’s largest advertising pool–Media and Entertainment (M&E). These were dollars streaming companies spent to acquire customers and drive engagement. As content companies rationalized their own costs, this pool of ad dollars collapsed. Although Roku’s overall ad revenue kept growing, it was far slower than before and came against a growing cost base…” (Click here to read the full text)

While we acknowledge the potential of ROKU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.