Netflix Embraces AI in Production, Stock Slides Amid Shareholder Concerns

Netflix's adoption of AI in production has sparked controversy, causing its stock to decline. The company has partnered with Runway AI to speed up operations, but the extent of their involvement is unclear. Netflix is also scaling back its gaming market, focusing on tie-ins for its internal properties rather than original content. Analysts have a Moderate Buy consensus rating on NFLX stock, with an average price target of $1,392 per share, implying 18.38% downside risk.

Netflix Inc. (NFLX) has been at the forefront of integrating artificial intelligence (AI) into its content production processes, a move that has sparked controversy and affected its stock performance. The company has partnered with Runway AI, a startup specializing in AI video generation tools, to enhance its production capabilities. However, the extent of this partnership and its implications remain unclear, adding to the market's uncertainty.

Runway AI's technology has been used by Netflix to streamline video production tasks, such as creating special effects shots more quickly and cheaply than traditional methods. While Netflix's co-Chief Executive Ted Sarandos confirmed the use of AI in content production, he did not disclose the specific software used. A source familiar with the matter suggested that Runway's software was not employed for a particular scene where a building collapsed in the show "El Eternaut" [2].

The use of AI in content production has raised concerns among film and TV professionals about the potential impact on their livelihoods. Disney Co. has also been testing Runway's technology but has no plans to integrate it into its content production pipeline at this time [2]. This cautious approach highlights the industry's ongoing debate about AI's role in entertainment.

Netflix's stock has seen a decline following the news of its AI integration and the subsequent controversy. The company's stock price has been influenced by various factors, including the uncertainty surrounding the extent of its AI involvement and the broader market sentiment toward AI in entertainment. Analysts have a Moderate Buy consensus rating on NFLX stock, with an average price target of $1,392 per share, indicating an 18.38% downside risk [1].

In addition to its AI initiatives, Netflix is scaling back its gaming market. The company is focusing more on tie-ins for its internal properties rather than original content. This shift in strategy reflects Netflix's broader approach to diversifying its revenue streams and adapting to changing market dynamics.

The integration of AI in Netflix's production processes and its impact on the company's stock performance highlight the complex interplay between technology adoption and market sentiment. As AI continues to evolve, its role in the entertainment industry will likely remain a topic of debate and scrutiny.

References:

[1] https://www.gurufocus.com/news/2989989/aeries-technology-launches-ai-partner-network-to-accelerate-operational-ai-adoption-in-midmarket-enterprises-aert-stock-news
[2] https://www.latimes.com/business/story/2025-07-22/netflix-using-startup-runway-ais-video-tools-for-production