Dear Income traders,

Netflix may be one of the cheapest forms of entertainment on the planet.

That matters.

In a world where households are rethinking spending, very few people look at Netflix and say, that’s the expense I need to cut. It is low-cost, habit-forming, and used constantly. That is a powerful combination. And Netflix has also done a smart job pushing more users toward the ad tier, which helps keep the service affordable while opening up another monetization lever at the same time.

I also think the market likes what Netflix has not done.

They did not go out and make some giant, messy acquisition like Warner. They stayed disciplined. They did not reach for some empire-building deal that could have loaded up the balance sheet and distracted management. In this environment, investors appreciate focus.

But the biggest point may be this: in a world of endless creation, real intellectual property becomes more valuable.

AI is going to flood the world with content. Infinite content. Endless content. Cheap content. But trademarked characters, branded franchises, and recognizable worlds still matter. No matter how good generative tools get, not everybody gets to create the next major franchise with protected characters and cultural relevance. That scarcity has value. And Netflix owns more of that than people sometimes give it credit for.

On top of that, Netflix is also likely to benefit from AI on the cost side. Production, editing, localization, dubbing, visual workflows, even parts of development – all of that should get cheaper and faster over time. So while AI is destroying the economics of many software and platform businesses, Netflix may actually be one of the companies that uses AI to widen margins and strengthen its position.

Yes, YouTube is a formidable competitor. But Netflix still looks like a company doing a lot right.

Now compare that to Shopify.

I would leave SHOP alone here.

This is not about saying Shopify is a bad company. It is about recognizing where the market pressure is building. Agentic AI, Claude, and the broader acceleration in intelligent software are creating a serious problem for anything that looks like a coded platform or software tollbooth.

That is the danger zone.

If AI agents start handling discovery, merchandising, store creation, customer service, copywriting, marketing workflows, and eventually even purchase decisions, then the market is going to keep questioning the durability of companies built around those layers. Anything coded is dangerous. Anything that can be abstracted, automated, or replaced by intelligence is under pressure.

That is why this pair makes sense to me.

Netflix owns cheap entertainment, sticky consumer behavior, real brands, real franchises, and potentially lower costs ahead.

Shopify sits much closer to the part of the market where AI is pressuring the value proposition itself.

Love NFLX. Leave SHOP.

Trade smart, stay hedged.

Will Mark pick either one on Monday’s Ticker Highlight?

Join the Ticker Highlight show through Monday and pick the price you want to pay.

Have a great weekend.

Hans