Why Roku Could Outperform the Streaming Sector in 2026

The streaming sector is undergoing a profound transformation, with advertising-driven models emerging as a critical growth engine. Amid this shift, Roku Inc. (ROKU) stands out as a compelling candidate to outperform its peers in 2026. This conclusion is rooted in its decade-long revenue growth, strategic partnerships, and a return to profitability, all of which position it uniquely to capitalize on the evolving ad-driven streaming landscape.

A Decade of Scalable Growth

Roku's financial trajectory over the past decade underscores its ability to scale rapidly. From $399 million in 2016, its revenue surged to $4.543 billion in the twelve months ending September 30, 2025, reflecting an average annual growth rate of 16.55%. This growth has been fueled by a combination of streaming device sales, partnerships with TV manufacturers, and advertising revenue. For instance, 2024 revenue reached $4.113 billion, a 18.03% increase from 2023, while 2023 itself saw a 11.45% rise from 2022. Such consistent expansion highlights Roku's ability to adapt to market dynamics, particularly as consumer demand for connected TV (CTV) platforms accelerates.

Strategic Partnerships and Ad Engagement

Roku's 2025 collaboration with Amazon represents a pivotal strategic move. Together, they created the largest authenticated CTV advertising footprint in the U.S., reaching over 80 million households-covering 80% of the CTV market. This partnership integrates Amazon's Demand-Side Platform (DSP) with Roku's advertising inventory, enabling advertisers to target logged-in users across devices and streaming apps with deterministic precision. The result? A 30% reduction in ad frequency and a 40% increase in reach for the same ad budget. This efficiency not only enhances advertiser ROI but also strengthens Roku's position as a go-to platform for CTV advertising.

Moreover, the partnership marks a departure from Roku's historical "walled garden" approach, now embracing interoperability with major DSPs like The Trade Desk and Google. This shift aligns with broader industry trends toward open ecosystems, where cross-platform targeting is critical for maximizing ad spend. For Amazon, the collaboration extends its retail media capabilities into the CTV space, while Roku gains access to Amazon's vast advertiser base.

Return to Profitability and Rising Ad Revenue

Roku's financial health has also improved markedly. In Q4 2025, the company reported net income of $40 million, signaling a return to profitability during the holiday season. For the full year, it anticipates total net revenue of $4.610 billion, with platform revenue-driven by advertising-projected to grow 12% year-over-year to $3.950 billion. Political advertising, in particular, has become a significant contributor, accounting for 6% of platform revenue in Q4 2024. This diversification of ad revenue streams reduces reliance on any single sector and enhances resilience.

Contrasting Valuation and Growth Metrics

While Roku's valuation appears stretched-its forward P/E ratio stands at 69.8x-this premium is justified by its exceptional growth prospects. For context, Netflix (NFLX) trades at a forward P/E of 7.79x, with 2026 EPS estimates of $3.21 (26.93% year-on-year growth). Spotify (SPOT), meanwhile, has a TTM P/E of 85.34 as of December 2025, but its ad-driven revenue in Q3 2025 declined 6% year-on-year. Roku's Zacks Consensus Estimate for 2026 EPS is $1.21, reflecting a 265.6% year-on-year jump, far outpacing both peers.

Netflix's recent struggles-stemming from a stock decline of 25–30% in 2025 due to earnings misses and a proposed Warner Bros. Discovery acquisition-contrast sharply with Roku's momentum. Similarly, Spotify's leadership transition and weak Q2 earnings highlight its vulnerability to market volatility. Roku's focus on CTV advertising, bolstered by its Amazon partnership, offers a more scalable and diversified revenue model than content-driven rivals.

Addressing Risks and Valuation Concerns

Critics may argue that Roku's high valuation leaves it exposed to earnings shortfalls. However, its revenue growth and expanding ad engagement metrics-such as the evolution of its home screen into an interactive commerce environment-justify the premium. The market is pricing in long-term potential, particularly as CTV advertising is projected to become a $20 billion industry by 2027. Furthermore, Roku's operating margin has improved with cost efficiencies in device manufacturing and advertising technology, suggesting sustainable profitability.

Conclusion

Roku's combination of decade-long revenue growth, strategic partnerships, and ad-driven innovation positions it to outperform the streaming sector in 2026. While valuation concerns persist, its growth metrics and market leadership in CTV advertising provide a compelling case for investors. As the industry shifts toward open ecosystems and data-driven ad targeting, Roku's adaptability and execution prowess make it a standout player in the next phase of the streaming revolution.