Core Insights - The article compares two leading companies, Alphabet and Netflix, highlighting that while both are growing at similar rates and valuations, Alphabet is considered the better investment choice due to its diversified business model and lower risk profile. Company Overview - Alphabet generates the majority of its revenue from advertising but also has a rapidly growing cloud computing business, which accounted for about 15% of its revenue in Q3, with a year-over-year growth of 34% [9][12] - Netflix primarily derives its revenue from subscriptions to its streaming service, which is available in over 190 countries and has over 325 million subscribers [4][5] Financial Performance - Netflix's revenue grew by 17.6% year over year in Q4, an acceleration from 17.2% in Q3, and its full-year growth rate for 2024 was 16% [5] - Alphabet's revenue increased by 16% year over year in Q3, with its Google Services revenue rising by 14% [9][11] Profit Margins - Netflix's operating margin expanded from 26.7% in 2024 to 29.5% in 2025, with expectations to reach 31.5% in 2026 [7][8] - Alphabet's cloud segment saw an impressive operating income growth of 85% year over year, reaching $3.6 billion [12] Growth Opportunities - Netflix's advertising revenue more than doubled in 2025, reaching over $1.5 billion, which is 3.3% of its total revenue, and is expected to double again [8] - Alphabet's diversified business model allows for broad-based double-digit growth across major segments, making it less vulnerable to market fluctuations [14] Acquisition Considerations - Netflix is pursuing a significant acquisition of Warner Bros. Discovery's assets valued at $82.7 billion, which poses both opportunities and risks [16] - Alphabet does not have any pending acquisitions that could introduce significant risks, making it a more stable investment option [17]

Core Insights - True value in investments is derived from growth rather than short-term gains, emphasizing a long-term perspective on evaluation [1] - Great businesses provide significant societal value and exhibit durability, deserving growth proportional to their superior products and services [1] - Key characteristics sought in investments include selection, convenience, value, and durability, with a preference for non-cyclical businesses [1] Business Characteristics - The ability to create superior products and services that outperform competitors is crucial [1] - Multiple revenue streams and anti-fragile business structures are preferred, indicating resilience in adverse conditions [1] - Uniqueness is identified as the primary driver of value, with low maintenance costs allowing for high reinvestment potential [1] Management and Strategy - Trust and network effects are important indicators of business durability [1] - Effective management is critical, with a preference for executives who have aligned interests and a strong focus on the business [1] - Successful companies, like Amazon, demonstrate that a customer-centric approach can yield extraordinary returns [1] Investment Timing and Strategy - The optimal time for investment is when negative news is already known, revealing true value [1] - Companies that can maintain stability during layoffs and do not need to chase talent are seen as more valuable [1] - Price movements are influenced by expectations and surprises, with interest in companies that have negative factors priced in but positive aspects underestimated [1]