XTB Stock of the month: By Kathleen Brooks, research director, XTB.
It’s hard to pick just one stock this month, as multiple themes are dominating financial markets. Donald Trump’s scattergun approach to policy so far in 2026 suggests that he will take a more interventionist approach in foreign and domestic policy. This could have big implications for stock prices and for the commodity market in the coming months.
Due to this, when picking stocks for your portfolio at the start of this year, you need to consider some extra factors: will the stock continue to perform well if the economic and geopolitical backdrops change? Is this company at risk from political intervention, particularly in the US?
Interestingly, at the same time as political risks are rising, the US economy continues to perform well. The key to investing in 2026 is managing to find strong companies that can navigate an uncertain world.
Although the S&P 500 has reached new records close to the 7,000 level, the index is no longer led by the Magnificent 7 big US tech stocks. Although tech is still a key driver of the US stock market, the top performers so far this year are the smaller, second level tech names. No longer is Nvidia dominating the AI debate, now we are talking about Sandisk, the memory chip maker that is a crucial component of AI products, and Intel is also a top 10 performer so far in January.
While we expect US trillion-dollar tech giants to remain resilient due to their sheer size and scale, there are other opportunities in the tech space. We remain attracted to opportunities outside of the Magnificent 7, and the sector’s resilience to political turmoil means that tech stocks are still in focus for us this month, including Netflix. We like the streaming giant for a few reasons: 1, it can benefit from a strong US economy, 2, it is resilient to geopolitical risks and 3, it is expected to report strong earnings for 2025 on 20th January.
Netflix earnings to show strong fundamentals
The earnings report is expected to show strong fundamentals for 2025, analysts expect revenues of more than $11.9bn for Q4, and for net income or profits to come in at $2.37bn, after a blockbuster content lineup in the final months of last year. The finale of Stranger Things, live American football games over the Christmas period and the Jake Paul vs Anthony Joshua fight is likely to have boosted results last quarter.
The market will be focused on 2026 revenue forecasts from the company; analysts expect revenues to grow by 13% this year. This is a high bar and will only be possible if there is strong advertising growth. Advertising revenue is expected to double in 2025, and this leaves a good base for further expansion in 2026. If the US economy remains resilient, along with a pickup in activity in Europe and other key markets, this could keep advertising revenue buoyant in the coming months.
Netflix is expected to report solid fundamentals, but the focus is still likely to be on M&A, and its bid for Warner Brothers Discovery. The company faces competition from Paramount Skydance, however, so far Netflix has not engaged in a bidding war even though Paramount has offered a higher price for the company.
Netflix’s share price has weakened by 29% in the past 6 months, particularly since December when it announced its bid for Warner Bros. We think that this stock has been sold off too far. Even if it is not successful in acquiring Warner Bros. Netflix still has robust growth potential and will maintain its position at the world’s largest global streaming service. Thus, if it pulls out of the deal, its share price could rise. Combined with a strong earnings report, this stock could be in line for a recovery.
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Netflix, 12-month chart, a good time to buy?
Source: XTB and Bloomberg
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