2 Excellent Stocks to Buy on the Dip

The article argues that Netflix and Shopify remain attractive despite recent share declines, with Netflix down 43% over 12 months and Shopify down 27% this year. Netflix still has over 325 million paid subscriptions and is expanding in streaming and AI-driven engagement, while Shopify posted 34% year-over-year revenue growth to $3.2 billion and $476 million in free cash flow, though Q2 guidance was only high-twenties growth. Overall, the piece is a bullish dip-buying argument rather than a new catalyst-driven event.

Analysis

The market is penalizing both names for narrative shock, not broken franchises. That matters because in each case the core moat is actually being reinforced by the current environment: weaker sentiment is pushing management to lean harder into product differentiation, pricing architecture, and AI-driven engagement, which should improve monetization per user/customer over the next 12-24 months. The setup is classic multiple compression on companies with still-favorable operating momentum.

The second-order winner is not just the incumbents themselves, but adjacent ecosystems that benefit from their expansion. For NFLX, deeper penetration in sports and ad-supported tiers should pressure smaller streaming services and raise content bidding discipline across the sector, while also improving ad-tech inventory quality as engagement rises. For SHOP, AI-assisted merchant tooling can accelerate conversion for SMBs and agencies, but it also raises the bar for point solutions in website building, storefront design, and basic commerce automation that lack distribution.

The key risk is that both are still priced as long-duration growth assets, so any disappointment in guideposts can trigger another sharp de-rating before fundamentals catch up. NFLX likely has a cleaner path to re-rating if subscriber trends or engagement surprise positively over the next 1-2 quarters; SHOP needs a few more quarters of sustained FCF and operating leverage to justify its premium multiple. In both names, the downside scenario is not permanent business damage — it is a prolonged 'show-me' period that keeps valuation capped even if fundamentals remain healthy.

Consensus is likely underestimating how much AI is an enabler rather than a destroyer here. The market has been treating AI as a substitute threat to software and media, but for these two, it should function more like a productivity and personalization layer that widens the moat and improves unit economics. That creates a mispricing window where the stocks can stay volatile, yet the business quality underneath keeps compounding.

Key Decisions for Investors

• Buy NFLX on a 3-6 month horizon via staged entries on weakness; target a 15-20% rebound if engagement or subscriber commentary stabilizes, with downside limited if the market merely moves from panic to patience.
• Initiate a long SHOP / short low-quality software basket pair trade over 3-6 months; SHOP’s premium can hold if AI features translate into retention and FCF growth, while weaker peers remain vulnerable to valuation compression.
• For options, consider NFLX call spreads 3-6 months out rather than outright calls; this captures a sentiment reversal while reducing exposure to another post-earnings gap down.
• Avoid chasing both names after intraday rebounds; use volatility to enter only when the market is pricing in a multi-quarter slowdown, not just a one-quarter guide miss.