The Netflix Mirage: Why Energy Infrastructure Plays Offer Better Growth Than Streaming Giants

The streaming revolution that Netflix (NFLX) pioneered has hit a wall. While the company's Q2 2025 earnings showed modest subscriber growth (+1.2 million), its stock remains nearly 40% below its 2021 peak. Investors are right to question whether Netflix's $30 billion valuation—based on 238 million subscribers and slowing content margins—can outpace its costs. But the real opportunity lies elsewhere: in energy infrastructure stocks that are quietly positioning to profit from AI's insatiable demand for power. While Netflix's growth faces saturation risks, companies like CoreWeave (a key player in the AI energy infrastructure boom) are unlocking asymmetric returns by leveraging regulatory tailwinds and strategic vertical integration.

Why Netflix's Growth Is Overvalued, and Its Risks Are Underappreciated

Netflix's challenges are structural. Its content costs now exceed $20 billion annually, up from $14 billion in 2020, while average revenue per user (ARPU) has stagnated at $14.50/month. Meanwhile, competition from Disney+, Paramount+, and Apple TV+ has fragmented the market. Even its foray into AI-driven recommendations—using tools like NVIDIA's H100 GPUs—requires energy expenditures that cut into margins.

The bigger issue: AI's energy needs are reshaping the global economy, and Netflix is on the wrong side of the trend. While the streaming giant burns cash to retain subscribers, infrastructure firms like CoreWeave are building the grids that power AI's future. Let's break down why this matters:

The AI Energy Tsunami: A $720 Billion Grid Upgrade Opportunity

Global data center electricity consumption is projected to hit 945 TWh by 2030, up from 415 TWh in 2024, per recent studies. AI's “accelerated servers” (used for training models) are the fastest-growing segment, consuming 30% more energy annually and contributing half of the increase. To meet this demand, Goldman Sachs estimates $720 billion in global grid investments will be needed by 2030—a figure that doesn't account for cooling systems, water infrastructure, or regulatory compliance costs.

This is where CoreWeave shines. By acquiring Core Scientific for $9 billion in July .25, CoreWeave secured 1.3 gigawatts of power capacity—including 840 MW dedicated to high-performance computing (HPC) and 500 MW repurposable for AI or crypto. This vertical integration slashes lease costs by $10 billion over 12 years and guarantees $500 million in annual savings by 2027. With a $25.9 billion revenue backlog (including a $11.2 billion deal with OpenAI), CoreWeave is insulated from demand volatility through its take-or-pay contracts, which account for 96% of 2024 revenue.

The Trump Tariff Windfall: Protecting U.S. Supply Chains

CoreWeave's strategy isn't just about scale—it's about geopolitical risk mitigation. Trump-era tariffs (25% on Canadian/Mexican imports, 10–25% on Chinese goods) have accelerated the shift to U.S.-based data centers. By focusing on domestic energy grids and partnering with U.S. firms like NVIDIA (a 5% shareholder), CoreWeave avoids supply chain disruptions. Its 360 MW of active power capacity and access to infrastructure financing at lower costs give it a 20–30% cost advantage over global competitors.

Even better: regulatory tailwinds. The 2024 AI Environmental Impacts Act mandates transparency in energy use, favoring firms with vertically integrated grids. Meanwhile, states like Georgia (which barred passing data center costs to residential customers via SB 34) are creating frameworks that protect CoreWeave's margins.

Why Netflix Can't Compete in This New Economy

Netflix's problems go beyond content costs. Its core business model—selling subscriptions to a saturated market—is incompatible with AI's energy-heavy future. Consider:
- Marginal Returns on AI: Netflix's AI spend (already $500 million annually) improves recommendations but doesn't generate new revenue streams.
- Energy Costs: A single AI training run for a large model can consume 1–5 gigawatts—equivalent to a Hoover Dam's output. Netflix's 2025 EBITDA of $3.6 billion would vanish if it tried to fund such projects internally.
- Regulatory Risks: The AI Act's transparency mandates could expose Netflix's energy inefficiencies, further squeezing margins.

In contrast, CoreWeave's 2025 stock performance (up 40% YTD despite sector volatility) reflects investor confidence in its predictable revenue streams and moat-like cost advantages. Even if AI adoption slows, CoreWeave's contracts with hyperscalers like Microsoft (62% of 2024 revenue) and its diversification into IBM partnerships ensure stability.

The Contrarian Play: Bet on the Grid, Not the Stream

Investors chasing growth should pivot from overhyped streaming stocks to the energy infrastructure layer that powers AI. CoreWeave's $155–183.58 stock range offers a risk/reward ratio of 1:1.25 at current prices, with upside to $200+ if it secures more hyperscaler deals. Meanwhile, Netflix's valuation—trading at 25x forward EBITDA—faces a ceiling as content costs and competition rise.

The takeaway: AI's energy demands are a once-in-a-decade infrastructure play. CoreWeave isn't just a data center operator—it's a regulatory and logistical gatekeeper in a $720 billion market. Netflix, by contrast, is a relic of the content era, priced for perfection in a world that no longer needs endless streaming options.

Action Items for Investors:
1. Sell or avoid NFLX unless it demonstrates AI-driven revenue beyond cost savings.
2. Buy CoreWeave or similar infrastructure plays (e.g., Dominion Energy's nuclear partnerships or NextEra's grid modernization projects).
3. Monitor tariffs and energy policies: U.S. grid upgrades and China's DeepSeek model competition will drive sector momentum.

The energy infrastructure boom isn't a fad—it's the next phase of the digital revolution. Investors ignoring it risk missing the next Amazon or NVIDIA in the making.