For investors looking for a good investment, one good filter is to think deeply about a business's durability. Is it a company likely to still be performing well 10 years from now? This helps rule out businesses that may be too risky for a portfolio in the first place. Two companies with durable traits that come to mind are Alphabet (GOOG +0.40%) (GOOGL +0.39%) and Netflix (NFLX 0.14%).
Both companies have dominant brands in their respective spaces.
While Netflix's business is the more focused of the two, with most of its revenue coming from subscriptions to its streaming service, it also has an emerging advertising business. And, of course, its streaming service is made up of an exhaustive library of licensed content, but more notably, many popular original series and movies as well.
And though Alphabet generates the majority of its revenue from advertising, it also makes money from subscriptions across its platforms and a fast-growing cloud computing business.
But which of these two market leaders is the better buy?
Image source: Getty Images.
Netflix: strong revenue growth and expanding operating margins
While Netflix isn't the sprawling technology company that Alphabet is, the company's streaming service does have global reach. The service is available in more than 190 countries and boasts over 325 million subscribers.
And despite its size, the company continues to grow rapidly. Revenue in Netflix's fourth quarter rose 17.6% year over year -- an acceleration from 17.2% in Q3 and even higher than the company's full-year growth rate of 16% in 2024.
NASDAQ: NFLX
Key Data Points
But what's particularly compelling about Netflix's business is that it's still expanding its profit margin. After achieving an operating margin of 26.7% in 2024, Netflix's operating margin expanded to 29.5% in 2025. And management believes its operating margin can expand further to 31.5% in 2026.
Also worth noting: Netflix is increasingly benefiting from its still-small but fast-growing advertising business. In 2025, Netflix's advertising revenue more than doubled in size, growing to over $1.5 billion in revenue, or 3.3% of its total revenue -- and management expects this business to "roughly double" this year.
Alphabet: advertising, cloud computing, and more
Alphabet's business is similarly growing fast, with revenue rising 16% year over year in Q3. But it's more diversified -- and it has a rapidly growing cloud computing business that already represents a meaningful portion of revenue.
NASDAQ: GOOGL
Key Data Points
The company's Google Services business, which is its largest segment, includes a diversified mix of subsegments, with "Google search and other" being the biggest. Other contributors to the segment include YouTube ads, Google Network revenue, and revenue from subscriptions, platforms, and devices. Alphabet's third-quarter Google Services revenue rose 14% year over year.
But the company's Google Cloud segment, or its cloud computing business, rose 34% year over year in Q3, accounting for about 15% of revenue. Impressively, the segment's operating income soared 85% year over year to $3.6 billion.
Which growth stock is the better buy?
So, which of the two stocks is a better buy? To me, Alphabet looks like the clear winner when comparing the two.
Sure, on valuation, the two stocks look about the same. Alphabet and Netflix's price-to-earnings ratios are 33 and 34, respectively, as of this writing. But Alphabet's business is more diversified, with broad-based double-digit growth across almost every major segment. In addition, its cloud business is growing much faster than its overall business and boasts a rapidly expanding operating margin.
Netflix does have a fast-growing ads business, but it's still small relative to its overall revenue. Still, it's a notable catalyst. Further, the company's expanding operating margin is a reason to be upbeat about Netflix stock.
But unlike Alphabet, Netflix has a pending massive acquisition of some of Warner Bros. Discovery's (WBD 0.60%) assets, specifically its namesake Warner Bros. film and television studios, including HBO Max and HBO. The deal, which is subject to regulatory approval and other customary closing conditions, is valued at $82.7 billion -- about 23% of Netflix's total market capitalization as of this writing. While an acquisition like this obviously presents opportunities, it also carries with it significant risks.
Overall, Alphabet looks like a better buy given its more diversified business and the absence of a pending risky acquisition.
