True to his word, President Donald Trump fired the first salvo and imposed tariffs on the largest trading partners of the U.S. – China, Canada and Mexico. Although the Trump administration negotiated with Mexico and Canada to delay tariffs by one month, immediate retaliatory measures from China have fed fears of an impending trade war, capable of upending the global economic order.
An escalation in the trade war will result in higher inflation and a slowdown in the easing of interest rates. This will have a direct effect on the capital markets as well, with dwindling revenues and profits adversely affecting share prices.
However, companies with pricing power – those with the ability to pass on the rise in costs to the consumers without denting their demand – are where investors should turn to shield their portfolios. To that end, Evercore ISI analysts have identified two stocks that it expects to remain resilient despite potential headwinds from the ongoing tariff war.
Stock #1: Netflix
Founded in 1997, Netflix (NFLX) is an American media company that started as a DVD rental service and has since become the leading global streaming platform. Netflix is now available in over 190 countries worldwide, and it has become a major player in the global entertainment industry.
Valued at a market capitalization of $425 billion, NFLX stock has been an outperformer over the past year with a nearly 78% uptick.
Over the years, Netflix’s revenue and earnings have grown at impressive compound annual growth rates (CAGRs) of 21.63% and 41.71%, respectively.
Further, the results for the most recent quarter saw the company beating estimates for both revenue and earnings. Revenue of $10.2 billion reflected year-over-year growth of 16%, and earnings of $4.27 per share doubled from the year-ago EPS of $2.11. Notably, this marked the fourth consecutive quarter of earnings beats from the company.
Global paid memberships and paid net additions at 301.63 million and 18.91 million witnessed yearly growth rates of 15.9% and 44.1%, respectively.
Net cash from operating activities came in at $1.5 billion as the company closed the quarter with a cash balance of about $8 billion. This was much higher than the short-term debt levels of $1.8 billion.
Moving away from financials, Netflix’s recent price hikes, alongside its investment in high-quality original content, are expected to drive stronger-than-anticipated top-line growth in 2025. The standard plan without ads will rise from $15.49 per month to $17.99, while the ad-supported tier will increase by $1 to $7.99. The premium plan has been adjusted from $22.99 to $24.99.
Unlike competitors that raise prices to achieve profitability, Netflix’s ability to maintain pricing power stems from its aggressive content strategy, which has consistently attracted and retained subscribers. Shows like Squid Game, Arcane, and Wednesday, along with its expansion into sports programming, demonstrate the company’s commitment to delivering exclusive, high-value content that resonates with its audience.
Beyond its core streaming business, Netflix continues to enhance its ad-tech capabilities, with management signaling improvements in targeting, programmatic availability, and measurement tools. These enhancements are expected to be accretive to both top- and bottom-line performance in 2025. Additionally, Netflix’s expansion into mobile gaming is broadening its audience reach. The company offers games tailored to different age groups, from CoComelon for toddlers and SpongeBob for younger kids to more mature titles like Grand Theft Auto, Narcos, and Money Heist for adult audiences.
Netflix’s move into live sports streaming is another major growth driver, with high-profile events such as the Logan Paul vs. Mike Tyson fight and NFL games significantly boosting paid subscriber additions. The platform has recorded its highest-ever streaming numbers for NFL broadcasts, demonstrating strong consumer engagement. As Netflix’s share of total U.S. viewership increased from 7.6% in May 2024 to 8.5% in December 2024, its deeper push into live sports adds further value to its subscription model.
Overall, analysts have deemed the stock a “Moderate Buy” with a mean target price of $1,071.89 which denotes upside potential of about 7.7% from current levels. Out of 42 analysts covering the stock, 27 have a “Strong Buy” rating, two have a “Moderate Buy” rating, 12 have a “Hold” rating, and one has a “Moderate Sell” rating.
Stock #2: Spotify
Founded in 2006, Spotify (SPOT) is a Swedish audio streaming and media services provider offering digital audio content, including over 100 million songs and 6 million podcast titles. Operating on a freemium model, it provides basic features for free with advertisements and limited control, while additional features, such as offline listening and ad-free experiences, are available through paid subscriptions. The company currently commands a market cap of $123 billion.
SPOT stock is up 178.5% over the past year, comfortably outperforming the broader market.
The last five years have seen the company recording revenue and earnings CAGRs of 18.72% and 8.56%, respectively.
However, the results for the most recent quarter were mixed, with the company reporting an earnings miss but a beat on revenue estimates. Total revenue went up by 16% on a YOY basis to 4.2 billion euros. The company reported an EPS of 1.81 euros compared to a loss of 0.36 euros per share reported in the previous year.
Further, key operating metrics such as total monthly active users (675 million, +12% YOY), premium subscribers (263 million, +11% YOY) and ad-supported monthly active users (425 million, +12% YOY) also marked an improvement from the prior year.
Net cash from operating activities for the quarter came in at 883 million euros, up 122% from the prior year with free cash flow of 877 million euros (+121% YOY). Overall, the company closed the quarter with a cash balance of 4.8 billion euros which was much higher than its short-term debt levels of 1.3 billion euros.
Meanwhile, Spotify’s growth strategy is being driven by multiple factors, including rising ad revenue from podcasts, international market expansion, and improved ad-targeting technology that enhances both user engagement and advertiser appeal. The company’s podcast segment has become a major revenue generator as listener engagement with non-music content continues to grow. The addition of audiobooks to premium plans in select markets is another strategic move aimed at boosting retention by offering subscribers more value. Meanwhile, Spotify’s international expansion, particularly in Latin America, is fueling strong user growth, supported by localized content and flexible payment options that improve accessibility.
On the advertising front, Spotify is leveraging dynamic ad insertion, which allows for more precise targeting and higher ad rates. The company’s AI-driven personalization tools, such as AI DJ and curated playlists, are keeping users engaged, making the platform even more attractive to advertisers.
Beyond audio, Spotify is expanding into video content at an accelerating pace. Over 170 million subscribers have streamed video on its platform, a significant jump from just 10 million five years ago. Video podcasts have also seen explosive growth, with over 300,000 shows available and a 60% increase in monthly views over the past year. User engagement continues to rise, with the average time spent on the platform reaching approximately 40 hours per month. This deep level of user engagement not only strengthens Spotify’s ecosystem but also reinforces its ability to scale advertising revenues while driving long-term subscriber retention.
Analysts have attributed an overall rating of “Moderate Buy” for the stock with a mean target price that has already been surpassed. The high target price of $630 denotes upside potential of about 1.3% from current levels. Out of 29 analysts covering the stock, 18 have a “Strong Buy” rating, two have a “Moderate Buy” rating, eight have a “Hold” rating, and one has a “Strong Sell” rating.
