Netflix's primary business is a streaming video on demand service now available in almost every country worldwide except China. The firm primarily generates revenue from subscriptions to its eponymous service. Netflix delivers original and third-party digital video content to PCs, internet-connected TVs, and consumer electronic devices, including tablets, video game consoles, Apple TV, Roku, and Chromecast. Netflix is the largest SVOD platform in the world with over 220 million subscribers globally.

We have adjusted our recommended sector allocations for the third quarter of 2023. We raised Communication Services to Over-Weight from Market-Weight. This "barbell" sector contains high-growth, low-income social media stocks on one end and low-growth, high-income telecom services stocks on the other. Hybrid cloud is emerging as the key delivery mechanism for AI-as-a-service. Social media stocks offering hybrid cloud services are positioned to benefit from the AI wave, in our view. As well, telecom stocks are likely near the end of mobile device weakness and are positioned for improved customer ARPU as the next generation of 5G smartphones launch in fall 2023. We have lowered Materials to Market-Weight from Over-Weight. Even as energy prices recover, many commodity prices have remained weak or weakened further. Most are traded in U.S. dollars. The dollar is inversely correlated to commodities, and long-term dollar strength is weighing on commodity prices. Elsewhere, demand from China remains sluggish as the lifting of zero-tolerance COVID restrictions has failed to stimulate the economy. Our current Over-Weight sectors are Communication Services, Financial Services, Consumer Discretionary and Technology. Our current Market-Weight sectors are Basic Materials, Industrials, Healthcare, Real Estate, and Utilities. Our Under-Weight sectors are Energy and Consumer Staples. We suggest that advisors and investors leverage this consistent and comprehensive process to adjust sector weightings within diversified equity portfolios, with a primary focus on the largest sectors.

Alibaba is the world’s largest online and mobile commerce company as measured by gross merchandise volume (CNY 8.3 trillion for the fiscal year ended March 2022). It operates China’s online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). Alibaba's China commerce retail division accounted for 67% of revenue in the year ended March 2022. Additional revenue sources include China commerce wholesale (2%), international commerce retail/wholesale (5%/2%), local consumer services (5%), cloud computing (9%), digital media and entertainment platforms (4%), Cainiao logistics services (5%), and innovation initiatives/other (1%).

eBay operates one of the largest e-commerce marketplaces in the world, with $74 billion in 2022 gross merchandise volume, or GMV, rendering the firm a top 10 global e-commerce company. eBay generates revenue from listing fees, advertising, revenue-sharing arrangements with service providers, and managed payments, with its platform connecting more than 132 million buyers and roughly 20 million sellers across almost 190 global markets at the end of 2022. eBay generates just north of 50% of its GMV in international markets, with a large presence in the U.K., Germany, and Australia.