NFLX Stock Downgraded to Neutral by JPMorgan

Earlier yesterday, JPMorgan cut its rating on Netflix Inc (NFLX) to Neutral from Overweight. As reasons for the downgrade, the bank cited the stock's valuation and its belief that the company's defensiveness could become less attractive to investors in the future.

Valuation Concerns and Potentially Less Defensive-Minded Investors 

The valuation of NFLX stock has reached an all-time high, as it's changing hands at a forward price-earnings ratio of 39 and a forward free cash flow-price ratio of 44 times. Given these metrics, JPMorgan thinks that the shares may already reflect possible increases in the firm's 2025 guidance.

Further, Netflix Inc (NFLX), which has been seen as a great defensive stock in recent weeks amid worries about tariffs and a potential recession,  could become less attractive if these worries fade, according to JPMorgan.

JPMorgan Remains Upbeat on Netflix Inc (NFLX)'s Fundamentals

Netflix is still one of the top names in streaming, and it can become a global TV content provider, according to the bank.

While we acknowledge the potential of NFLX, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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