The Transformative Influence of Artificial Intelligence (AI) on Firm Financial Performance

Abstract

This paper examines the transformative influence of Artificial Intelligence (AI) on firm financial performance, emphasizing the strategic integration of AI technologies and their impact through a focused case study on Netflix. AI's role in enhancing decision-making, problem-solving, and operational efficiency across various business domains—such as inventory management, financial record-keeping, and customer segmentation—is critically analyzed, highlighting its potential to revolutionize conventional business methodologies. The study underscores the complexity of measuring AI adoption, citing the absence of standardized metrics and the adoption of both qualitative and quantitative measures to assess its impact. Netflix is presented as an exemplary case of AI integration, showcasing how strategic AI adoption can significantly improve viewer engagement, content strategy, operational efficiency, and, consequently, financial growth. Through semi-structured interviews with Netflix executives, analysis of public documents, and observation of AI-driven functionalities, this research delves into the strategic rationale behind Netflix's AI investments, the implementation processes, and the resultant financial outcomes. The findings from the Netflix case study illustrate the critical role AI plays in driving firm performance, highlighting increased viewer engagement through personalized recommendations, optimized content strategy via data-driven decision-making, and enhanced operational efficiencies. These advancements have contributed to Netflix's remarkable financial growth, with a substantial increase in its subscriber base and revenue, positioning Netflix as a dominant player in the streaming sector. This paper contributes to the literature by providing tangible, real-world evidence of the benefits and challenges of AI adoption in a corporate setting. It underscores the importance of strategic alignment, organizational readiness, and the adaptation to technological evolution as key factors determining the success of AI initiatives. Furthermore, it offers valuable insights for businesses aiming to leverage AI for competitive advantage and financial sustainability, emphasizing the need for ongoing research in the dynamic field of AI and its business implications.