Wall Street Roundup: The fog of tariffs
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Brian Stewart, our Director of News at Seeking Alpha. Welcome back to Wall Street Roundup. Great to be here. Always great to talk to you and see how things are going in the markets and in the world and in the economy.

I think probably the big stock name to report this week that we discussed last week in anticipation of the earnings release is everybody's favorite AI stock, NVIDIA. What would you say about what you saw out of NVIDIA and the market's reaction to it? Yeah, I feel that NVIDIA is fomenting a real debate

among the investor community so far today. The stock is up about 4% as we're talking now on Thursday. It was up more earlier in the day, but it's pulled back a little bit. So a modestly positive response.

to the earnings. To put that into perspective, the stock's trading at about 140 now. Its 52-week high was 153, just over 153. So it's about 9% away from that 52-week high. Looking the other way from April lows, the stock is up 62%. So it's already had a giant rebound from the nadir of the tariff concerns back in April.

So the company's earnings this time around is basically receiving a shrug from Wall Street. If you ask the Bulls, they'll tell you that the company is seeing macro problems with its China sales. But outside of that headwind, there's strength in other geographies and strength in areas like gaming. So even outside the AI sector.

However, on the other side, the bears would say that the AI-related data center growth has been slowing the last several quarters. So it reached a peak in Q1 of last year at 427% annual growth. It's been less and less each quarter since until this last quarter, 73% year-over-year growth. Obviously, that's still pretty strong, especially when you're lapping a 400%

gain last year. The data center revenue is now 10 times what it was in Q4 of 23. So it's currently Q1 of 26, the way that they do their fiscal quarters. So a little over two years, you've seen NVIDIA increase their data center revenue by 10 times. So the question now just becomes, where are we

in that growth cycle? Have we captured all the growth there is to capture and now it's just going to level off or is there another wave coming?

And what are the data points to pay attention to along the way until their next release, would you say? I think looking at other players in the sector, Broadcom, for instance, is reporting its earnings next week. Obviously, that's probably a little soon to give us any new information that we didn't already hear from NVIDIA. But tracking those kind of results, and especially the management commentary, I think there's a lot of

headline risk both up and down for all these stocks just based on the international situation, tariffs and import curbs and other issues that make it difficult to predict exactly how sales are going to play out in different geographies. So I would keep an eye on those headlines as well. And then look for spending

predictions from other companies. Meta in its last earnings report, rather high profile, discussed how it's still building out the spending for its data centers. So if you're seeing other major players like that discuss their ongoing spending, that's a pretty good sign for companies like NVIDIA.

And talking about valuing these stocks is something that we've talked about on Investing Experts on that podcast a little bit in terms of the difficulty of navigating how to value these stocks.

like a Meta, like an NVIDIA, like a Broadcom, like a Tesla, like a Palantir, where the news is promising but not definite, how would you say or what do you see out of the investing community that is attempting to navigate that? Or what are some points that you would highlight in terms of investors trying their best to sufficiently value these stocks? I think you hit the nail on the head in terms of

That being the central debate about the valuation of these large companies. And I think from an investor's point of view, it points to a situation where

You can be right on the theme, but wrong on the particular player. I think it speaks to being diversified within the AI space. If you think that that's a major growth area, there's still room to run there. One example I have for the past week is Intuit, which is the company that runs TurboTax. They rose 8% on Friday after reporting their earnings and then another 4% Tuesday, which is the first day of the trading week this week.

So that pushed it to a 52-week high. It's up 42% from its April lows. It beat expectations and raised guidance, thanks in large part to a strong showing for its TurboTax Live product. But in the wake of that, analysts were also pointing to the benefits that are working through the system from the AI integration of products like MailChimp and QuickBooks and their other

products that they provide that help people run their small businesses. So you're seeing the AI build out starting to drop to the bottom line to some of these companies. So the bet might not completely be in the infrastructure plays going forward. I think that as an investor, if you're bullish on AI, which I think most people are, it's about finding the companies that have the most leverage in that area and finding ones that haven't popped yet.

Is anyone bearish on AI at this point? Like to your point about most people are bullish on AI, do you hear any bearish takes still? No. I mean, you have doomers who would say something like, well, eventually AI is going to launch the missiles and destroy us all, those kinds of arguments. Another sort of bearish argument would be it's overhyped that the promise of AI now isn't going to play out, at least not play out in as near a term as we had hoped. But

I don't know. I think anybody who's even played with ChatGPT in any meaningful way can see how impressive it is in terms of a productivity tool. And as a company, it's just a matter of figuring out what AI does well, what it doesn't quite do well yet, and then putting it in a position to help you do whatever business you're running. So I think, again, it's just kind of an execution risk would be the bearish

And I think that really kind of goes company to company, whether a company has a near-term opportunity to leverage it or whether it's a longer-term play. So sticking with the earnings theme, we saw some other names report this week, Salesforce being one of the bigger names. What did you see out of Salesforce and what other earnings were you paying attention to this week? Yeah, Salesforce is an interesting one, especially on the topic of near-term versus longer-term earnings.

impacts of AI. Salesforce is a company that's been benefiting from putting AI into a lot of its customer-facing products. They just announced an $8 billion deal to buy the cloud data management company Informatica. Sorry, I don't know if I'm pronouncing that right, but Informatica. There's some worry about

about that integration, just how quickly it's going to happen, whether integrating that's going to be a distraction for the AI projects that are already underway at the company, whether that's going to delay some of the rollouts while management is distracted somewhat. So the stock is down 6% Thursday following its earnings reports. There was nothing terrible in the earnings, but a lot of the

the benefits, the better than expected results were helped by foreign exchange. So there's a sign that maybe the underlying fundamentals were not as strong as many investors would hope. So in terms of execution risk, I think that's a company that's a good example of a place where there are some concerns about whether or not the

The hope for the AI rollout is going to be delayed more than people had expected. A name that reported last week, but that saw some...

reverberations from the report this week was Decker's Outdoors. And I think that might be a nice stock to discuss as a segue into the tariff conversation. There was a big decline and then there was a bit of a rebound. What would you say about the news coming out of Decker's?

A company that's off the radar a little bit, I think, for most investors, but I do think that it represents a good test case for the tariff situation. I would say the two headlines that have dominated the market so far this week have been NVIDIA earnings and then the unfolding tariff drama that continues. Dun, dun, dun, dun.

Exactly. And Decker's Outdoor is a good example of that. It was down 19% last Friday following the release of its earnings. There was nothing major for the last quarter that was particularly disturbing, but the company gave guidance with a large hit from tariffs. So it's a company where there was a huge worry about how the tariffs are going to affect the bottom line. But then over the weekend, when Trump announced the

The moratorium on the EU tariffs that allowed the company to, the stock to bounce back significantly, it went down 19% and then bounced back more than 7%.

on the following trading session on that news. So it's just an example of retailers especially, but any company that has supply chains tied to international trade are in danger of being whipsawed as the headlines bounce around. In terms of the tariff talk, I was talking to a friend that lives outside of the US and

It's interesting to hear people's opinions outside of the U.S. and what kind of news they're getting. And it seems that there is a sense that the tariffs, once there is a decision made, might bring some stability to the markets.

But my point was, we're still in a wait and see game with the tariffs. And then boom, this news comes out and it seems even more apparent that there is nothing settled in the tariff conversation. What are you seeing out of that news? How the markets reacted? How investors are reacting and your thoughts? Yeah, I agree with the notion that...

Certainty at whatever level of tariff is better than the uncertainty that's happening now, just in terms of the market setting some sort of floor and moving forward. I mean, if companies can make longer term decisions based on whatever the environment is going to be, then things can start to settle into a normal pattern. I think the risk there is Trump's strategy seems to be better.

to perpetually negotiate, to continue to delay and then announce and then put pressure on it, which could very well work out to the benefit in the long term as long as a deal is eventually

finally struck. Meanwhile, you're dealing with each of these geographies separately, China, India, the EU. So there's not really room for a grand bargain to be struck. So it's all going to be happening in dribs and drabs as the negotiations move forward. So to your point, I think that complicates the situation. I don't see

sort of a moment of clarity happening. I don't see kind of coming out of the fog in any near term. I think it's just something investors are going to have to be used to at least, I'd say over the next 90 days, maybe through the rest of 2025, maybe beyond that, who knows? I think investors are going to have to get used to operating in that sense of not knowing quite when a shoe might drop in terms of tariffs.

Being comfortable with being uncomfortable definitely seems to be the era that we're in. A hundred percent. Yeah. Did you see any of this coming? Was this a sense of this, something like this coming down the road? Was it in the news that this might be happening? I certainly didn't have an inkling of this particular news. I think I've gotten used to the idea that

Anything that's happened is reversible. And I should mention too, it's not just Trump administration policy and negotiating tactics. There's also the court's decision recently to stop the April tariffs. And there are other players in the game. There's other countries taking steps in response to that as well. So you have many, many different players. So it's not just a Trump watching situation. It becomes...

much more complicated than that. So like I said, I don't know. If you're more plugged into the situation in various markets, you might be able to predict whether something's going to happen. I would advise investors to not try and

get ahead of headlines, but create a portfolio that has sufficient shock absorbers that it's not going to be taken terribly by surprise when things go an unexpected direction. Yeah. And I think the very nature of the tariff conversation is its unpredictability. I mean, there is no way that anybody has a sense of what's going to be happening from day to day or from week to week or from month to month. Yeah.

It's just impossible. Right. And just the market movements in response are so significant. You'll see 2%, 3%, 4% moves depending on the headline on that given day. I'm talking the NASDAQ or the S&P 500. And much stronger in individual stocks depending on how leveraged they are.

to that situation. So it becomes a matter of, as an investor, how much of that uncertainty can you absorb or near-term excitement because the markets also swing the other way. And other investors, ones that don't have that appetite for the swings might be looking for

safer places in the market to stash money until things clarify a little bit, looking for defensive areas that might be a little less susceptible to day-to-day movement. And how are you seeing this affect the macro data points, the macro conversation, how we should be thinking about the US broadly speaking and internationally for that matter? What are you seeing out of the broad macroeconomic picture? Yeah.

It's interesting because I feel that the underlying economic conversation has kind of gone by the wayside. People are either talking about tariffs and administrative policy as it affects the markets or talking about individual companies like Nvidia or Salesforce. It hits both lanes. Yeah, right. Or yeah, which is both, right? But meanwhile, there's kind of a longer term economic conversation going on. I mean, meanwhile, there's still

about what the Fed should be doing, whether inflation has been tamed enough to start cutting rates or whether they're still going to be in a wait and see situation. We have jobs data coming out next week, which is going to be a big signpost in terms of what the near-term economy looks

is doing. So kind of under the surface or off the radar, however you want to frame that metaphor, you have the overall economy just kind of churning somewhat uncertainly. So that's another looming risk that could start affecting markets if the news started to get worse. And anything to say vis-a-vis Tesla in terms of Musk

getting out of Doge. We had, you know, we've been talking about it so much on the podcast in terms of we had Gary Vaughn on investing experts talking about how he hopes that Musk gets out of politics to save the company.

There's been a lot of that sentiment shared. So I would assume it's mostly a positive reaction to this news. But do you have anything worthwhile to say about that? There's lots of unworthwhile things to say, I know. Of course. Of course. Any Tesla investor, like a philosophical precept would say that having your CEO full time at the company is better than not having your CEO at the company. So I can't imagine that anyone thinks him coming back is bearish unless...

You have a negative opinion of Elon Musk in general, in which case maybe your argument is better that he gets distracted. The real debate going on is to what extent has the brand been tarnished in particular areas? I'm thinking especially in Europe where sales are down dramatically since he went off on his Doge quest. Whether or not those sales can bounce back, whether or not things can return to normal for Tesla or Tesla,

whether this kind of side quest has damaged or altered at least the situation for Tesla in a way that's going to take a while to play out. I wanted to touch base about the retail stocks we talked about last week in terms of

and Gap and what we were seeing out of the retail space we discussed a bit last week. Anything to update listeners with there? I think the general retail sector is very hard to read right now. So many of them are tied into the tariff situation that really those headlines are going to

play a big part. I haven't checked in the last couple hours, but as of the open this morning, the impact of the court decision about tariffs has been pretty muted in the retail sector. So I think there's a sense in which investors in that sector are becoming kind of immune to individual headlines. Um,

So I think that points to a stock picker's market within retailers. If you're interested in that area, you want to seek out the companies that have some protections against tariff risk. As we talked about earlier, Decker's Outdoors is a great example of a company that can swing dramatically based on the outlook for tariffs.

As you and I have talked about a few times, a company like Walmart that has some negotiating leverage within its suppliers could be protected somewhat.

From that, they just have more options than a smaller company with less resources. I would look towards those, a data point that's coming out in the near future would be Costco's earnings. Costco has been taking market share from companies like Target. So like Walmart, it's been...

a solid performer in an uncertain market. So I think seeing those results will be an interesting signpost for the retail sector. And is the sense about Costco that they've taken that market share because of the protests around Target, or is it more than that? So I have to admit, I'm a little suspicious that the protests around Target are enough to damage it as dramatically as has happened. So I think there might be several reasons

Factors at the same time, that could be having a near-term effect plus macro factors that are eating into sales. But certainly Target has been among, if you count Walmart, Costco, and Target as kind of the trio at the top of the brick and mortar retail environment,

Target's been the loser among those three. I think the reasons are complex, but it'll be interesting to see to what extent Target can plant its feet and start to make the turnaround happen. What would you say are the main reasons for the market share loss? Is it Costco hot dogs and pizza? Is it more than that?

Yeah, probably. I think Target has an interesting place in the retailing world in that it's lower costs, obviously, than a luxury brand or something like that. But compared to its direct competitors, the Costcos and Walmarts of the world, it's a step up in terms of price points. And I think that it was...

Uniquely ill-prepared for the coming...

political and macro storms that were coming. I just don't think it was very well positioned for the particular macro situation that has emerged in say the past year. It's a matter of how quickly can Target reorient itself. And it's also a question of whether or not it requires a broad rethinking of its position in the retailing world, or whether it's just a matter of recapturing

the audience, the customer base that it's seen seep away to places like Walmart and Costco. So earnings coming up next week, we're still at a trickle pace a little bit. What would you say about earnings coming up next week? What would you point out to listeners? I think Broadcom is the main highlight. There's a couple other interesting ones. CrowdStrike is coming out that'll

Give some GameStop is on the calendar as well. They just made headlines because they're buying Bitcoin with their cash reserves. So it'll be interesting to see what else they have to say about their plans for the future. And then DocuSign comes out next week as well. I think that's an interesting business to business barometer to see how the

whether or not businesses are spending on services or whether there's a sense that they're starting to pull back in the face of whatever economic challenges they might be facing.

The GameStop getting into Bitcoin, I'm curious your take on that. We've seen this out of a number of stocks, some stocks a lot less attractive, let's say, to your average retail investor. And then the Bitcoin news comes out and they see a pop. Is this about...

Is this driving sentiment? Is this about gaining headline highlights that the company can get when it gets into Bitcoin? Because there's a lot of discussion around why would you get into a stock just because they're getting into Bitcoin? If you're bullish on Bitcoin, just get into Bitcoin. What would you say about this trend of companies getting into Bitcoin, investors getting into stocks that are getting into Bitcoin? And then, yeah, I guess what are your thoughts about that and how investors should be or should be encouraged to think about that?

I think from a company's point of view, the goal of getting into Bitcoin is to appeal to a certain investor type. And I think GameStop is already on the radar for that group. So it was a meme stock. We're talking about younger investors, people who are...

momentum-driven people who are headline-driven. And so I think your point about making headlines and buying into something that's already popular within that investing cohort, I think is part of it. So you can kind of think about it in terms of, we were talking about how Target appeals to a certain demographic of consumer.

I think GameStop is trying to appeal to a certain demographic of investor with the move. Because like you say, I think if like any rational look at it would say, if you like

GameStop buying Bitcoin, just buy Bitcoin. There'd be no reason to have to worry about the retail part of that. If GameStop's not into Bitcoin, you think GameStop's a good company, you could buy Bitcoin and then also buy GameStop. And then your portfolio is just doing what GameStop is doing. So it feels like it's just adding volatility to the balance sheet of GameStop.

But like I said, I think it's meant to bring in a certain type of investor. I think it's meant to bring back a bit of the glory days of the meme stock era.

So I think it has a different goal in mind than a strictly business one. And would you say it's also a bit of trading versus investing? For the investors buying GameStop or for GameStop itself? The whole notion of getting in and out of those stocks. Is it more of a trading game than an investment game? Yeah, I think so. I mean, the other one that jumps to mind, obviously, is strategy, which has huge Bitcoin holdings and moves as a proxy for Bitcoin a lot. And Bitcoin...

moves on whatever news, then you'll see strategy move. And so GameStop might move more into that category depending on how aggressively they get into it. If you're a Bitcoin investor, I mean, aside from the GameStop part of it, if you're a Bitcoin investor, this can only be a bullish idea. The idea that more and more companies are going to put Bitcoin on their balance sheet

If it's becoming a proxy for cash on some companies' balance sheets, then that's only more people to purchase Bitcoin. So if you're holding Bitcoin, it's certainly bullish that you have another customer out there. So I don't know if... I see it more as...

a step along the way of the Bitcoin journey than really a step along the way of the GameStop journey, just because the GameStop journey has been so, I don't know the right word, so rambling in the last several years that it's hard to see where this points to in the future. Speaking of Bitcoin, we saw a high out of them recently. What would you say, what would you add to the Bitcoin conversation right now?

Yeah, as we were saying about GameStop, I think the long-term play for that is still just more acceptance in more areas. I think there's still, I don't think there's a lot of consumer pickup. I think anyone who owns Bitcoin as an individual is probably owning it as an investment, not as a medium of exchange in any way. So if you're a Bitcoin bull, there's that whole market that could conceivably change

come into play if it starts to become more frequently used as an actual currency. In the meantime, I think if you're a Bitcoin investor, you're thinking about and getting into Bitcoin, I think that the data points you're looking for is more situations where institutional investors are picking it up, are recommending it to their clients, the more it becomes just a regular part of everyone's portfolio, that's upside or

for Bitcoin.