The continuing threat of a far-reaching trade war and on-again, off-again tariffs has sparked historic volatility in the stock market in recent weeks. The dour mood resulting from ongoing correction has been offset by waves of euphoria, with investors latching onto any positive developments to bid up stocks from recent lows. A bit of good news over the weekend sparked a broad-based rally to kick off the week.
With that as a backdrop, artificial intelligence (AI) specialist Palantir Technologies (PLTR 0.46%) surged 4.6%, semiconductor supplier Micron Technology (MU +5.14%) jumped 2.6%, and iPhone maker Apple (AAPL +1.05%) rallied 2.4%, as of 11:52 a.m. ET on Monday.
Image source: Getty Images.
Tariffs uncertain
A memo was released by U.S. Customs and Border Protection late Friday, which granted a temporary exclusion from the 145% tariffs on certain electronics from China. The excluded products included smartphones, semiconductors, and chipmaking equipment. The move appeared to be a step in the right direction, as investors have feared that a protracted and far-reaching trade war could stifle the adoption of AI.
In response to this move, Wedbush analyst Dan Ives said that by taking this step, the White House "took the doomsday scenario off the table, and tech stocks will rally tomorrow as investors can now breathe a sigh of relief."
The certainty was short-lived, as the Trump administration appeared to backpedal in the days that followed. In an interview this weekend, Secretary of Commerce Howard Lutnick said the exemption was only temporary, and tariffs would be hitting electronics over the next couple of months, which would include smartphones and computers.
NASDAQ: PLTR
Key Data Points
President Trump sought to clarify his stance Monday morning, saying these products would not be exempted, but instead, "they are just moving to a different Tariff 'bucket.'"
In a bit of late-breaking company-specific news this morning, the North Atlantic Treaty Organization (NATO) announced in a press release that it had finalized the acquisition of Palantir's Maven Smart System, which would be deployed at NATO's Allied Command Operations military headquarters. The announcement noted that the sale was completed on March 25.
Supreme Headquarters Allied Powers Europe (SHAPE) and NATO are using Palantir's system as a springboard to adopt a range of state-of-the-art systems, "including new, emerging AI models, and modeling and simulation."
Some investors feared that Palantir's future results could be negatively affected by spending cuts by the U.S. Department of Defense. However, the ongoing push for more efficient and effective warfighting capabilities by the U.S. and its allies suggests that Palantir could actually be a beneficiary of the modernization efforts by replacing antiquated systems with cutting-edge upgrades.
NASDAQ: AAPL
Key Data Points
Time is on our side
While the AI revolution has been front and center for a couple of years, many believe it's still very early in the overall integration of the technology, and each of our trio of stocks is well-positioned to benefit from these secular tailwinds:
- Palantir's Artificial Intelligence Platform (AIP) has seen robust adoption, which has been fueling accelerating sales and profit growth.
- Micron is a leading provider of the memory (DRAM) and storage (NAND) chips that are critical components in AI processing.
- Apple is in the process of rolling out its Apple Intelligence across 2.35 billion devices, introducing AI across a broad swath of its products and services.
Some investors fear that a protracted trade war and far-reaching tariffs could stifle AI adoption by significantly increasing the cost of the semiconductors and supplementary products fueling these systems. That said, continuing innovation in the space will likely continue to drive the adoption of AI higher and benefit our trio of companies.
From a valuation perspective, Palantir is still pricey at 165 times forward earnings. However, Apple and Micron are attractively priced, selling for 28 times and 10 times forward earnings, respectively.
