Netflix bets big on AI to drive next wave of growth

With AI embedded across content, user experience, and advertising, Netflix aims to accelerate innovation, improve storytelling, and maintain its leadership in the streaming and ad-supported markets

Netflix is intensifying its adoption of artificial intelligence across content creation, user experience, and advertising as it charts its next stage of expansion, reporting a 17% year-over-year revenue increase to $11.51 billion in the third quarter of 2025. Despite the strong revenue growth, higher tax expenses in Brazil affected earnings, causing shares to dip in after-hours trading.

CEO Ted Sarandos emphasized that AI is intended to complement, not replace, human creativity. “Creating something remarkable still requires great talent. AI provides tools to enhance storytelling and enrich the viewing experience, but it cannot substitute for the vision and skill of a true artist,” he said during the earnings call.

AI in content and user experience

Music serves as an early example of AI’s creative impact, Sarandos noted. “AI-generated music exists, but it remains a small part of total listening, and established artists continue to dominate,” he said.

Netflix has rolled out its AI-powered TV interface to 85% of devices, surpassing prelaunch expectations. The company is expanding its use of AI and generative AI to improve content recommendations, conversational search, and localization of promotional materials for global audiences.

AI is also transforming production workflows. In Happy Gilmore 2, AI assisted in de-aging characters, while Billionaires’ Bunker used AI tools for pre-visualization and set design. Netflix’s Argentine series The Eternaut became the first to incorporate generative AI in final footage, depicting a building collapse sequence.

Expanding AI into advertising

Netflix is leveraging AI in its ad-supported business to test and optimize ad formats, placement, and media planning, aiming to “test, iterate, and innovate on dozens of ad formats by 2026.” Its Netflix Ads Suite integrates with Amazon and AJA’s DSPs to enhance targeting and programmatic capabilities.

Despite macroeconomic headwinds, Netflix posted a 12% increase in operating income to $3.25 billion and an 8% rise in net income to $2.55 billion. For Q4, the company forecasts $11.96 billion in revenue, with full-year 2025 revenue projected at $45.1 billion. Free cash flow is expected to remain robust at approximately $9 billion.

With AI embedded across content, user experience, and advertising, Netflix aims to accelerate innovation, improve storytelling, and maintain its leadership in the streaming and ad-supported markets.