A tariff is a financial penalty imposed on imported products to protect or promote domestic manufacturing. For example, some countries produce steel at a far lower cost than American manufacturers, so the U.S. could place a high tariff on imported steel from every country in the world to level the playing field for domestic producers.
The Trump administration says it wants to encourage companies to manufacture more products in America, so a sweeping 10% tariff was imposed on all imported most goods from every country. He also enacted a series of higher "reciprocal tariffs" which are now on pause, pending negotiations (except those on Chinese imports, which remain in place).
Image source: Getty Images.
It could take years for this policy to succeed, and in the meantime, it could trigger a severe economic slowdown as consumers grapple with rising prices. That's why the S&P 500 (^GSPC +0.54%) is down 16% from its recent all-time high. But the sell-off has created opportunities for investors, because not every company is directly impacted by tariffs. Digital products and services, for instance, are exempt from any levies (for now).
- Upstart Holdings (UPST 1.75%) originates loans for banks using its digital, artificial intelligence (AI)-powered algorithm, and it earns the overwhelming majority of its revenue inside the U.S.
- Uber Technologies (UBER +1.02%) operates the world's biggest ride-hailing platform, which is entirely service-based so it doesn't involve importing any physical products. Plus, it's active in more than 70 countries, giving the company a diversified revenue base.
Both companies are scheduled to report their latest quarterly financial results in early May, which could be a positive catalyst for their respective stocks. Here's why investors with a spare $120 might want to consider buying one share in Upstart and one share in Uber right now.
NASDAQ: UPST
Key Data Points
The case for Upstart
Upstart's AI-powered algorithm can rapidly analyze more than 2,500 variables to determine the creditworthiness of a potential borrower. It's a leap forward from traditional assessment methods that still rely on Fair Isaac's FICO credit scoring system, which mainly looks at five variables like a person's existing debts and their repayment history.
The results speak for themselves. Upstart says it approves twice as many loan applications while maintaining the same risk profile as traditional assessment methods, with an average interest rate up to 38% lower. In other words, its AI algorithm is more accurate at calculating the risk profile of borrowers. Plus, Upstart's approval process is fully automated 91% of the time because AI does the heavy lifting, which results in extremely fast outcomes for applicants.
Unsecured loans make up the bulk of Upstart's originations on behalf of its bank and credit union partners, but the company is also building a presence in automotive lending and the home equity line of credit (HELOC) segment.
Upstart's revenue shrank in 2022 and 2023 on the back of soaring interest rates, which crushed loan demand. That's the primary reason its stock remains 89% below its 2021 record high. But the company bounced back in 2024, generating $636 million in revenue-- a 24% increase from the prior year. The Federal Reserve started cutting interest rates in September last year, which contributed to a whopping 89% year-over-year increase in the number of unsecured personal loans Upstart originated in the fourth quarter.
Wall Street expects Upstart's momentum to accelerate in 2025. According to Yahoo Finance, analysts have an average revenue forecast of $1.01 billion for this year, which would be an eye-popping 58% increase compared to 2024. Investors will get their first look at the company's progress for the year when it reports its first-quarter results on May 6.
Now might be a great time to invest, because Upstart stock trades at a price-to-sales (P/S) ratio of 5.6 as of this writing, which is a 21% discount to its 12-month average of 7.1:
UPST PS Ratio data by YCharts
Upstart says $3 trillion worth of loans are written each year in the U.S. across mortgages, personal loans, car loans, and small business loans, so the company has barely scratched the surface of its opportunity. Therefore, investors willing to hold the stock over the long term could reap the biggest rewards.
The case for Uber
Uber operates the world's largest ride-sharing network, and it also runs successful food delivery and commercial freight services. The platform generated a staggering $162.7 billion in gross bookings in 2024, which represented the total value of every ride, food order, and commercial delivery.
Uber is positioned to become a major player in autonomous mobility, which could transform its economics. The company paid $72.5 billion to the human drivers within its network last year, which was the single biggest component of its gross bookings figure. If it can reduce or eliminate that cost, it will convert significantly more of its bookings into revenue and earnings.
Developers of autonomous technologies want access to the most potential customers, so they are flocking to Uber because it operates the largest mobility network in the world. Uber has already partnered with industry leaders like Alphabet's Waymo, which currently completes more than 200,000 paid autonomous trips every single week. Uber also has a deal with Serve Robotics, which created a self-driving robot designed to handle food deliveries.
NYSE: UBER
Key Data Points
Earlier this year, Uber also signed a deal to use Nvidia's DGX Cloud infrastructure and Cosmos AI foundation models to process the data it collects from the 12 billion trips it completes each year. The goal is to help its autonomous partners accelerate their path to commercialization, which is a great investment because it could save Uber billions of dollars in the long run as self-driving vehicles gradually replace humans in the network.
According to Cathie Wood's Ark Investment Management, autonomous ride-hailing platforms could create $14 trillion in enterprise value by 2028. It's probably an ambitious forecast considering the industry is still in its infancy, but even a fraction of that number could translate into a substantial value creation for Uber's investors.
As a result, while Uber might be a great tariff-resistant investment in the near term because of its service-based business model, the real value could be unlocked over a period of several years. The company usually reveals new details about its autonomous strategy each quarter, so investors should look for an update when it reports its latest results on May 7.
