Most of the companies on the venerable FAANG list are well-known masters of artificial intelligence (AI). Meta Platforms (META 0.43%) builds lots of AI-powered smarts into its Facebook, Instagram, and WhatsApp platforms. Amazon.com (AMZN 3.43%) and Alphabet (GOOG 9.96%) (GOOGL 10.22%) sell cloud-based AI tools and services to other companies. Apple (AAPL -0.35%) may not promote its AI use as heavily as its FAANG colleagues, but you know there's a lot of machine-learning tech involved in every Cupertino gadget.

They are great companies in their own right, and I would gladly recommend any of them when the stock price is right. However, most of them are soaring on a marketwide AI frenzy. So I'll just wait for them to cool down before making any share-buying moves. Meanwhile, I've got my eye on the lower-priced but just as exciting Netflix (NFLX -0.63%) stock instead.

The media-streaming veteran is changing before our eyes, leaning on new ideas such as ad-supported subscription plans and password-sharing mitigation tactics. Netflix also faces economic challenges while wrestling with two concurrent Hollywood strikes. So I get why Mr. Market is keeping a lid on Netflix's stock price right now, and I'm not ashamed to take full advantage of the red-tag discount.

Let me tell you why Netflix is easily the best FAANG stock to buy right now. In short, the ongoing strategy shift is an overnight success that was years in the making.

From high growth and skimpy profits...

Once upon a time, Netflix was a classic growth stock. The company was barely profitable in terms of after-tax earnings, and the production of original Netflix content burned through billions of dollars of negative free cash flows.

But those temporary losses didn't matter. Netflix's long-term business plan and accounting practices pointed to soaring cash flows in the future based on the massive global-user base it was building in the 2010s. Sometimes you have to spend money now in order to make much more money later.

Pedal to the metal, the company built an award-winning and subscriber-gaining growth machine. The revenue growth averaged out at 30% across that decade. By the end of 2009, 11.9 million people subscribed to the red DVD-mailers service. Ten years later, DVD membership had shrunk to 2.1 million names, but the streaming service reached 167 million households around the world.

During this period of extreme growth, Netflix critics complained about skimpy bottom-line earnings and an unclear payoff for the massive cash investments in original content.

...to rich profits and skimpy growth

Having achieved an enormous business scale and facing a difficult economic environment, Netflix has shifted into profit-taking mode. Year-over-year membership growth was just 8% in the second quarter of 2023, with 238 million streaming subscribers, and the ancient DVD service is no more.

But Netflix reported $4.2 billion of bottom-line earnings over the last four quarters along with $4.3 billion in free cash flows. The management style has abandoned the old subscriber-growth-at-any-cost to focus on profitable revenue growth instead.

In other words, Netflix is doing exactly what its critics were asking for in the 2010s. Now, the bears worry about slowing subscriber growth instead. You can't please some people, right?

The stock price, up by 33% in 2023, is at the very bottom of the AI-driven FAANG heap. Shares are changing hands at reasonable valuations such as 5.4 times trailing sales or 25 times forward-earnings projections. Never mind that Netflix was a data-powered AI beast long before ChatGPT made it cool. This is a powerful growth stock trading at modest stock prices even without an AI-fueled booster.

Just as every good Netflix series deserves a binge, this stock deserves a buy. The company is cashing in on the investments it made in the 2010s. Don't miss the next season of Netflix's shareholder saga; it promises to be a blockbuster.