Is Roku (ROKU) a Must-Hold Streaming Stock in 2026?

The streaming wars have entered a new phase, with connected TV (CTV) advertising emerging as the next frontier for growth. Amid this shift, Roku (NASDAQ: ROKU) has positioned itself as a pivotal player, leveraging its market leadership, profitability revival, and strategic partnerships to capitalize on the evolving ecosystem. But with a premium valuation and intensifying competition, is Roku a must-hold streaming stock heading into 2026?

Market Leadership and Platform Dominance

Roku's dominance in the U.S. streaming device market remains unchallenged. As of Q3 2025, the company powers over 50% of broadband-connected TVs in the U.S., with a 40.3% share of smart TVs sold in Q1 2025. Its platform, the #1-selling TV operating system in the U.S., Canada, and Mexico, commands a market share exceeding the combined total of the second- and third-place competitors according to market data. This leadership is further reinforced by the Roku Channel, which ranks as the second most-engaged app on the platform, trailing only YouTube.

The company's user base has also expanded significantly, surpassing 90 million streaming households in early 2025. With 36.5 billion streaming hours recorded in Q3 2025-a 12% year-over-year increase-Roku's platform has become a critical hub for ad-supported streaming, a trend expected to dominate the industry by 2026.

Profitability Revival and Financial Momentum

Roku's financial turnaround is equally compelling. In Q3 2025, the company reported its first quarter of positive operating income since 2021, with net income of $24.8 million compared to a $35.8 million loss in the prior year. Platform revenue, which includes advertising, content distribution, and subscription sharing, surged 17% year-over-year to $1.065 billion, driven by a 51.7% operating margin. For full-year 2025, Roku raised its revenue guidance to $4.69 billion and adjusted EBITDA to $395 million, exceeding analyst expectations.

However, the stock initially tumbled 6% after hours due to a $1.21 billion revenue miss against $1.23 billion estimates according to Chartmill analysis. This volatility underscores the challenges of balancing device revenue declines down 5% to $146 million in Q3 2025 with platform growth. Yet, the company's long-term value proposition remains intact, evidenced by its $50 million share repurchase under a $400 million buyback program and a projected 12% revenue growth for Q4 2025.

Strategic Partnerships and Ecosystem Expansion

Roku's strategic alliances are reshaping the CTV advertising landscape. The landmark partnership with Amazon, which integrates Amazon's Demand-Side Platform (DSP) with Roku's advertising inventory, now reaches 80 million U.S. households-80% of the CTV market. This collaboration enables advertisers to execute hyper-targeted campaigns across Roku and Fire TV devices, offering 40% greater reach and 30% less ad frequency.

Simultaneously, Roku's expanded partnership with Nielsen enhances measurement accuracy, providing advertisers with granular insights into audience behavior across linear and streaming platforms. This integration also grants Roku access to Nielsen's Streaming Platform Ratings, a critical tool for tracking ad-supported streaming performance. Together, these partnerships solidify Roku's position as the go-to platform for CTV advertising, with a 37% market share in North America-nearly double Amazon's 17%.

User Engagement and Retention Strategies

Roku's ability to retain users hinges on its focus on personalized experiences. The platform's AI-powered content suggestions and Frndly TV acquisition aim to bolster affordable live and on-demand offerings. With 253.7 minutes of daily engagement per user, Roku's ecosystem fosters loyalty through seamless integration of ads, subscriptions, and interactive features like shoppable home screens.

While traditional demographic data is increasingly unreliable for targeting, Roku's emphasis on psychographic segmentation-focusing on user motivations and behaviors-aligns with modern marketing trends. This approach, combined with robust retention metrics such as Day 1, Day 7, and Day 30 retention rates, positions the company to maintain user stability amid competitive pressures.

CTV Advertising Growth and Long-Term Valuation

The CTV advertising ecosystem is projected to grow rapidly, with Roku at the forefront. Advertisers are shifting budgets from search and social media to CTV, drawn by its high ad completion rates (90–95%) and measurable impact. Roku's AI-driven contextual ads, interactive shopping capabilities, and self-service platforms like Roku Ads Manager are democratizing access to CTV advertising, attracting both large brands and small businesses.

By 2026, 100% of TV viewing is expected to occur in ad-supported environments, a trend Roku is uniquely positioned to monetize. Its 37% CTV ad market share in North America and 50% dominance in Latin America according to Newscast Studio suggest a scalable, recurring revenue model. However, the company's premium valuation-trading at a forward P/E of 25x as of December 2025-requires sustained growth in EBITDA and user monetization to justify its price.

Competitive Positioning and Risks

While Roku leads in CTV device market share with 38% in the U.S. vs. Amazon's 18%, it faces threats from Samsung (30% in EMEA according to Newscast Studio) and YouTube's expanding ad-supported subscriber base according to Mountain's analysis. YouTube's flexibility in ad formats (e.g., skippable TrueView ads) and Amazon's retail infrastructure pose long-term challenges. However, Roku's first-mover advantage in CTV measurement, combined with its 80% market reach via the Amazon partnership according to Beet TV, creates a formidable moat.

Conclusion: A Must-Hold for 2026?

Roku's market leadership, profitability revival, and strategic partnerships justify its premium valuation, but investors must weigh near-term risks. The company's dominance in CTV advertising, coupled with its ability to adapt to ad-supported streaming trends, positions it as a top-performing streaming stock. However, execution risks-such as device revenue declines and competition from YouTube and Samsung-require close monitoring. For those with a long-term horizon, Roku's ecosystem and growth trajectory make it a compelling hold in 2026.