We recently published 10 Stocks to Watch as Investors Scramble to Pour Money into AI Trade. The Walt Disney Company (NYSE:DIS) is one of the stocks that caught analysts’ attention.
Laura Martin, Needham managing director, said in a latest program on CNBC that Walt Disney Co (NYSE:DIS) should shut down ABC because the broadcast TV network has been a drag on the entertainment giant’s growth.
“The ABC network is structurally shrinking every year, with between 5% and 11% of its revenue disappearing annually, which slows the reported growth rate of Walt Disney Co (NYSE:DIS). Disney would grow its revenue 5% this year if it didn’t own ABC, and about 4.5% because it does. Higher revenue growth rates lead to multiple expansion from Wall Street. When calculating the value lost by keeping ABC versus the higher multiple Walt Disney Co (NYSE:DIS) could get from faster structural revenue growth over the next 10 years, there’s about $20 billion of value creation, roughly 10% of the company’s market cap. Nothing else in the Disney empire is regulable in the same way, so if ABC were shut down, the government couldn’t stop Walt Disney Co (NYSE:DIS)from taking actions, which is increasingly valuable in a generative AI world. You don’t want to be restricted in reacting to the marketplace and consumers as AI continues to disrupt markets.”
Analyst Says Disney (DIS) Should ‘Shut Down’ ABC, Thinks It’s ‘Shrinking Every Year’
Ariel Global Fund stated the following regarding The Walt Disney Company (NYSE:DIS) in its second quarter 2025 investor letter:
“We also bought The Walt Disney Company (NYSE:DIS), the storied entertainment conglomerate whose businesses span media networks, film studios, theme parks, cruise ships and consumer products. A recent pullback in the stock provided an attractive entry point. In our view, growth in Disney+ subscribers, higher average revenue per user (APRU), margin expansion in the streaming segment and greater license sales amid successful releases will result in substantial operating income growth, bolstering the company’s overall margins and free cash flow generation.”
While we acknowledge the potential of DIS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.
Disclosure: None. This article is originally published at Insider Monkey.