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CNBC's Jim Cramer believes Netflix 's innovative use of artificial intelligence (AI) in its ad-supported tier is a game changer, positioning the company far ahead of its

competitors. "The ad-tier is working," Jim Cramer said Friday on "Squawk on the Street," emphasizing that Netflix's AI capabilities enable the platform to understand

exactly what viewers want, boosting its potential to enhance user engagement and deliver more effective ads. "Netflix is so far ahead of everybody else," Jim noted, adding that

the Street's enthusiasm for Netflix stock on the back of Thursday's beat-and-raise quarter is largely driven by its success in AI-based advertising. Netflix's AI advantage,

Cramer highlighted, is why investors are willing to pay up for the stock. He set a $1,000 price target on the stock, which implies a 30% upside from Friday's intraday high of roughly

$763. His bullish take comes on the heels of the streaming giant delivering a better-than-expected third quarter late Thursday — its most profitable quarter ever — with strong results across

revenue, earnings-per-share and operating income. The stock surged more than 10% Friday and is up 56% in 2024. NFLX YTD mountain NFLX stock performance year-to-date. Netflix uses machine

learning to assess user content viewing patterns, data that helps provide personalized recommendations on relevant shows and movies. This is important to keep users on the platform longer,

an incentive that attracts companies to place ads on the streaming service. The streaming giant is prioritizing growth in ad-tier memberships to be relevant in the advertising market and

it's already making progress. Ad plans for the third quarter accounted for 50% of sign-ups in the 12 countries where ads are currently available, which includes the United States.

Netflix launched an ad-supported tier in late 2022 and plans to expand to more countries in 2025. Looking ahead, co-CEO Gregory Peters stated that advertising would become one of

Netflix' key growth drivers during the company's post-earnings webcast Thursday. He projected ad revenue will roughly double in 2025.