Will Roku Stock Outperform Netflix in 2026? Is It a Buy Now?

TradingKey - To understand what the company behind Roku stock (ROKU) does, consider Roku TVs, Roku streaming sticks, and the Roku Channel. Roku builds and operates the software and tech stack of streaming TVs, which powers its ecosystem. Roku's lower-margin hardware draws in users, but its business model relies on its platform, which generates ad revenue and revenue share from streaming service partners. That platform-first approach explains why many consider Roku to be a TV operating system instead of a streaming service. Since its IPO in 2017, Roku has established itself as one of the most deployed TV OS manufacturers in the US and Canada.

Besides the in-house free ad-supported Roku Channel, Roku integrates apps like Netflix and Disney Plus among many others. These streaming apps and many more rely on Roku for audience aggregation, providing Roku with unique ad inventory and audience insights to better target clients with cord-cutting and streaming fatigue. Economically speaking, Roku is software for a significant part of Connected TVs and ad monetization.

How Did Roku Perform in 2025?

Roku stock headed into 2025 with remarkable gains and increased by 50% since the previous quarter. This positive performance has more metrics to back it than prior years. Since 2021, Roku had to court operating profitability, turning to it in Q2 2025, and has since then maintained it. In Q3 2025, it posted a net income of 24.8 million dollars. For the core of the business, i.e., platform revenue, it increased by 17% Y-o-Y in Q3, an indicator of a healthier ad demand and overall monetization.

Engagement metrics improved, with the most recent quarterly report indicating a streaming record of 36.5 billion hours of content, an increase of 14% Y-o-Y. By the start of 2025, Roku had 89.8 million total streaming households. Even though the company has chosen to restrict user metrics transparency, retained streaming hours mean continued user traction. Management has improved advertising tools, including the 2024-launched self-service ads platform, adding an AI component to campaign creation and management. More demand for ads, paired with the previous concerns around declining ad revenue growth, has been addressed with the expanded advertising partnership with Amazon.

Roku and Netflix: What Are the Differences?

To compare Netflix stock (NFLX) to Roku stock is to compare two distinct components that make up the streaming value chain. Netflix is an international Subscription Video on Demand service, while Roku is an aggregation and ad-tech platform that’s built into TVs (Roku TV) and into TV streaming devices (e.g., Roku Express). Netflix has a lot of money going towards the creation of content that is monetized mostly from subscribers, but it also has begun to monetize from advertising as a way to build revenue per subscriber. Roku is the curator of the streaming ecosystem; it sells advertising within its platform and within the Roku Channel, as well as working with partners to share in their revenue.

Netflix appears to have an established path towards obtaining profit at a substantial scale. The current operating margin goal of 31.5% by 2026 has been established through an assessment of company-specific metrics—such as its ability to generate additional revenue through pricing power, provide consumers with more value due to premium tiers, and leverage advertising revenue (which is projected to more than double in 2025). Therefore, current investor value assigned to Netflix will likely hold steady around 27 times the projected earnings of $613 per share for 2026 based on long-term growth rate estimates of approximately 21% annually—consistent with historical growth for Netflix.

Roku stands to gain the most from the increasing migration of brand budgets from Linear TV to Connected TV; advertising dollars have historically lagged viewing time. Currently, the U.S. TV ad market is worth $90 billion, and Connected TV is worth $30 billion. As consumers spend more time on Roku’s platform, ad dollars have yet to catch up and are Roku’s opportunity. Analysts anticipate Roku's revenue will increase to $5.3 billion in 2026, an approximate 13% increase. Adjusted earnings per share will be around $1.15, with earnings expected to potentially double in 2027 if all goes as planned. Roku's earnings base is young, contributing to high forward earnings multiples, while the stock has a relatively low 3.4 times sales. Roku's stock reflects its early-phase profits and the untapped potential in ad spend on Connected TV.

What gets Roku ahead is being neutral, which is where viewers spend hours daily. Roku competes relatively well in streaming because advertisers spend marketing dollars in large content libraries. Instead, advertisers spend money on Roku because it does not own content libraries. Instead, it does advertising, measuring reach, and performance. But there is still competition in advertising because of companies like Amazon Fire TV, Google TV, and other smart TV operating systems. Netflix does not own features in advertising and marketing like Roku, and it is not a neutral stream. But Netflix still holds the customers because it has content, and it controls the prices.

Could Roku Stock Outperform Netflix in 2026?

Despite having a legitimate path towards greater profitability relative to Netflix, Roku's growth is contingent upon a number of different variables and is subject to significant fluctuations. Because Roku's profits have yet to complete their recovery cycle, any incremental shift in revenue can yield a proportionately larger amount of change in earnings. Should Connected TV advertising budget growth be accelerated, should Roku's advertising technology initiatives build momentum, and should the channels for new demand continue to expand, Roku's operating leverage may generate stronger year-over-year increases in both revenue and stock price relative to its existing low price.

In comparison, while Netflix also has ample opportunity for continued improvement, it possesses more substantial visibility with respect to its margin expansion potential and sustainable global scale. As long as its advertising tier continues to grow at a rapid pace with stable pricing, Netflix will be able to present compelling investment returns without reference to unconditional macroeconomic conditions. Subsequent to that stability, Netflix will tend to exhibit less volatility and narrower ranges of variability within an annual time frame.

Specifically with 2026, the ad cycle is likely to be the deciding factor as to whether Roku will exceed Netflix in terms of total returns. In a risk-on environment where marketers ramp up their investment in Connected TV advertising to match where viewers are watching, Roku has the potential to outpace Netflix. Conversely, in a more volatile advertising environment, Netflix's large subscriber base and established margin trends could continue to provide a level of support for Netflix's performance. While Roku may outperform Netflix from a revenue perspective, it requires both supportive advertising conditions and continued focus on executing monetization and integrating partnerships in order to do so.

Is Roku a Buy in 2026?

So, should you buy Roku stock in 2026? It all depends on your time horizon and risk tolerance. Roku isn’t a dividend stock and is still subject to the advertising cycle, so it’s not a good fit for investors who are interested in income or low volatility. Roku, for growth investors who understand the dynamics of ad-supported models, offers a pure play on a long-term shift in TV advertising. The platform has demonstrated increasing financial discipline with a return to profitability, strong engagement growth, and an expanding set of tools for advertisers that help deepen relationships and improve yield over time.

The valuation needs to be considered in terms of sales as well as earnings. A multiple of a few times sales would imply that investors are discounting a significant amount of the platform’s revenue growth potential if Connected TV budgets continue to shift. At the same time, forward earnings multiples appear high as profit is still bouncing back. Modesty goes a long way—size your position according to risk tolerance and view through a multi-year lens because the biggest drivers for Roku are structural and not merely quarterly.

Investors who prefer to go with a more diversified route can gain exposure to Roku by investing in ETFs that hold Roku stock along with other Communication Services and technology or innovation stocks. Ultimately, this allows them to reduce their risks associated with owning single-company stocks while maintaining an investment in the Connected TV theme. If you want to have direct exposure to Roku and are willing to assume some volatility, 2026 may provide an opportunity to acquire shares if you believe there is still upside potential in the advertising market, and if Roku continues to expand its share of the market for both the Roku TV product as well as its advertising platform.