Tesla And Apple Hit by Tariff Shock

FINANCE
Tesla And Apple Hit by Tariff Shock

Even the world’s largest company and richest man aren’t immune to tariff shocks. On Monday, Trump’s proposed tariffs shook markets, hitting Apple and Tesla the hardest among tech giants. While markets stabilized after Trump paused tariffs on North American allies, Tesla’s stock remained flat as other automakers rebounded. Apple, meanwhile, gained 2% by midday Tuesday as investors considered its ability to shift production.

Tesla fell 5% on Monday, the biggest drop among the Magnificent Seven. Trump’s 25% tariff on Canada and Mexico threatens the auto industry’s complex supply chains. Tesla CFO Vaibhav Taneja acknowledged the company’s efforts to localize its supply chain but admitted it remains reliant on global parts.

Despite supporting Trump, Musk opposes tariffs. In May, he criticized Biden’s 100% import tax on Chinese EVs. Meanwhile, analysts say Trump’s 10% China tariff will have minimal impact on Apple, as 80% of its U.S. sales can source products outside China.

ECONOMY
U.S. Job Market Cools Further

The U.S. job market remains solid, but workers are switching jobs less often as opportunities to trade up shrink. In 2024, Americans quit 39.6 million jobs—an 11% drop from 2023 and 22% below the 2022 peak. The monthly quit rate has fallen below pre-pandemic levels, with economists predicting further declines.

Hiring has also slowed. In 2024, 66 million people started new jobs, down from 71 million in 2023. Job openings now stand at 1.1 per unemployed worker, down from a peak of 2 in March 2022. White-collar jobs in tech, law, and finance are especially scarce, while healthcare and hospitality remain strong.

Companies are cutting costs, with Meta planning layoffs and RTX investing in automation. The Fed’s high interest rates aim to curb inflation but could further slow hiring. Despite this, layoffs remain low, and the job market continues to cool gradually without major disruptions—at least for now.

FINANCE
AMD Stock Drops on AI Miss

AMD’s stock dropped nearly 9% after-hours as data-center sales fell short of Wall Street expectations. Despite beating overall revenue estimates with $7.1 billion in Q1 sales, AMD’s $3.86 billion in data-center revenue missed the anticipated $4.14 billion.

The company’s AI-focused Instinct GPUs were a key focus, as Nvidia dominates the sector while Intel struggles. AMD’s MI300X chips are gaining traction, with Meta, Microsoft, IBM, and Dell adopting them. CEO Lisa Su emphasized improvements in its ROCm software, positioning it as an open alternative to Nvidia’s CUDA.

However, analysts remain cautious. BofA cut its price target to $135, citing AI competitiveness concerns. The spotlight now shifts to AMD’s next-gen MI350 chips, set for mid-2025, which promise a 35x performance leap. While Su sees strong demand, HSBC remains skeptical. AMD’s future depends on its ability to challenge Nvidia and gain market share in AI computing.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.