Jefferies Urges Selectivity in Internet Stocks for 2026 as AI Disruption and Rising Costs pressure Margins

Netflix Inc. (NASDAQ:NFLX) is one of the best growth stocks to buy in 2026. On December 11, Jefferies analyst James Heaney lowered the firm’s price target on Netflix to $134 from $150, while keeping a Buy rating on the shares. Jefferies recommended a selective stance on Internet stocks for 2026. Key headwinds include rising investment costs that threaten profitability and concerns that AI will cut out traditional middlemen, potentially limiting how high stock prices can climb relative to earnings.

In other news, on December 15, Netflix co-CEOs Greg Peters and Ted Sarandos issued a letter to employees confirming that the company’s plan to acquire Warner Bros. Discovery’s TV, film studios, and streaming assets remains unchanged. Netflix initially secured the $72 billion deal earlier in December, structured as a combination of cash and stock with an enterprise value of ~$82.7 billion. This commitment stands despite a subsequent, separate $108.4 billion hostile bid for the entirety of Warner Bros. Discovery made by Paramount Skydance.

The acquisition is expected to add nearly $11 billion in debt to Netflix’s balance sheet, a factor that will be closely monitored as the company works toward a closing timeline of 12 to 18 months. In a major strategic pivot, Netflix announced it will begin releasing Warner Bros. movies in theaters after the deal closes, moving away from its traditional streaming-only model. This shift will require Netflix to build new internal functions for theatrical marketing and global distribution, sectors currently handled by Warner Bros.’ integrated in-house teams.

Netflix Inc. (NASDAQ:NFLX) provides entertainment services. The company offers TV series, documentaries, feature films, and games across various genres and languages.

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