Netflix hits the skip ad button

Hey Superheroes,

It’s been a blockbuster week for markets with the ASX 200, S&P 500 and Nasdaq all hitting record highs. This rally comes even as U.S. inflation rose to 2.7% in June, up from 2.4% in May, with tariff-driven price increases starting to flow through.

Trump’s tariffs are proving lucrative, raking in a record US$64 billion in customs revenue last quarter. And with most global players still ducking retaliation, markets seem unfazed… at least for now.

Back home, rising unemployment (4.3%) has all but cemented the RBA’s next rate cut, according to analysts. All up, markets are rallying on the idea that central banks are back in easing mode, even as trade risks linger.

Let’s dive into the stories behind the momentum.

Netflix’s Next Move: Pricing Power and Profits

Netflix just proved that streaming isn’t a race to the bottom.

The entertainment giant reported strong first-quarter earnings this week, beating market expectations on both revenue and earnings. It’s the latest sign that Netflix’s pivot toward profitability over subscriber growth is gaining traction.

💰 Ad dollars and price hikes boost performance

Netflix reported strong Q1 results, comfortably beating analyst expectations:

• Revenue: US$10.54 billion (vs US$10.52 billion expected)
• EPS: US$6.61 (vs US$5.71 expected)
• Net income: US$2.89 billion, up from US$2.33 billion a year earlier

The company credited stronger-than-expected ad revenue and a January price hike that lifted its standard plan to US$17.99, ad-supported plan to US$7.99 and premium plan to US$24.99.

🧠 Building the backend for ad growth

In April, Netflix launched its in-house ad tech platform in the U.S. with plans to expand globally. The move gives Netflix full control over its advertising stack – a key step as it scales its ad-supported tier and aims to improve long-term margins.

Management also reaffirmed its full-year revenue guidance of US$43.5B to US$44.5B, signalling confidence in its evolving monetisation model.

🧾 Out with the old KPIs

This quarter marked the first time Netflix didn’t report subscriber numbers. Instead, the company will focus on engagement and revenue as its key performance indicators. 

The shift shows Netflix is transitioning into a more mature, platform-driven business – one focused on monetisation, not just growth headlines.

TSMC’s AI-Powered Profits Surge

Semiconductor giant TSMC (NYSE:TSM) just delivered a blowout Q2 result and signalled it’s only just getting started.

The world’s largest chip foundry reported a 38% jump in revenue and a 61% surge in net profit for Q2 2025, hitting a new all-time high and beating analyst forecasts. 

AI is no longer just a future driver – it’s already transforming TSMC’s business today.

💻 AI chips are reshaping the revenue mix

High-Performance Computing (HPC) – which includes AI and 5G chips – made up 60% of TSMC’s revenue this quarter, up from 52% a year ago. Advanced chips (7nm and below) now contribute 74% of total wafer revenue, highlighting how AI is pulling TSMC deeper into the leading edge.

Clients like Nvidia and Apple continue to rely on TSMC’s cutting-edge fabs to meet surging compute demands. And unlike in past cycles, this growth is being driven by multi-year infrastructure builds, not short-term consumer cycles.

🏭 Scaling globally while managing risk

TSMC reaffirmed its 30% revenue growth forecast for 2025 (in USD terms) and confirmed ongoing expansion of its Arizona fab, with two more sites in the works. It’s part of a broader effort to reduce geopolitical exposure especially amid U.S. tariff threats and export controls tied to China.

But the company faces challenges: Taiwan remains at the centre of chip supply chains and additional tariffs or geopolitical shocks could weigh on future earnings. 

For now though, customer orders remain strong.

🔦  Some other things we’re shining the Spotlight on:

MESOBLAST’S MAGIC MOMENT: Mesoblast (ASX:MSB) jumped 36% today after it reported US$13.2 million (A$20.3 million) in Q2 revenue from the U.S. launch of its stem cell therapy Ryoncil. All sales came in the three months post-launch – a promising start for the biotech firm.

DRONESHIELD’S DEFENCE PLAY: DroneShield gained nearly 17% on Monday after the company announced a A$13 million investment in a new Sydney facility to scale production. The anti-drone tech firm is up 350% year-to-date on contract wins and rising defence demand.

ROCKET LAB TAKES OFF: Rocket Lab (NASDAQ:RKLB) soared 11% after announcing a deal with the European Space Agency and completing three successful launches in June. The stock is up over 80% over the past month as momentum builds in the commercial space race.

Keep up to date on the markets by following us on Instagram @superheroau. 

📅 Wall Street Earnings to watch next week

• Mon: Verizon
• Tue: Coca-Cola, GM, Intuitive Surgical
• Wed: Alphabet, Tesla, AT&T, IBM, ServiceNow
• Thu: Blackstone, Keurig Dr Pepper, Intel, Newmont
• Fri: Aon