Breakfast News: More Sector Tariffs Teased
March 25, 2025
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Monday's Markets |
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| S&P 500 5,768 (+1.76%) |
| Nasdaq 18,189 (+2.27%) |
| Dow 42,583 (+1.42%) |
| Bitcoin $88,413 (+3.81%) |
1. Tariff Confusion Continues
President Trump confirmed tariffs on auto imports and pharmaceutical products would be announced in the coming days. Stock futures inched lower this morning after renewed optimism swept across markets Monday, as investors saw more flexibility around the wave of tariffs due to take effect on April 2.
- "We don't make pharmaceuticals anymore in our country": Trump flagged domestic production as being critical in case of supply chain issues or even in the outbreak of war. As for autos, maintaining compliance with the United States-Mexico-Canada Agreement (USMCA) has meant the sector tariffs have been delayed so far, but it appears not for much longer.
- "I may give a lot of countries breaks": The global matching of tariffs due to come into effect may be narrower and exempt more countries than previously thought, based on further comments from the president.
2. Intel's Revamp Likely Targets Big Tech
Analysts at UBS believe Intel (INTC 5.41%) will focus on design and increasing its foundry unit, as the new CEO looks to provide the strategy going forward for the company.
- Shifting from traditional models: The foundry arm, which is the dedicated contract chip manufacturing division, provides semiconductors for external customers. UBS believes CEO Lip-Bu Tan will try to push the likes of Nvidia (NVDA 2.94%) or Broadcom (AVGO 0.54%) into a foundry commitment.
- Intel products revenue down 9% in Q4 2024: Such a move would help ease the pressure on declining PC sales and server CPUs, at a time when demand in the foundry space is booming. With more companies wanting custom chips, Intel has the ability to grow revenue substantially if enough focus is put on the division.
3. AI Spend Under Scrutiny
DeepSeek has revealed a fresh update with better programming capabilities as it pushes to compete with OpenAI, while Alibaba's (BABA +0.48%) chairman thinks the pace of datacenter buildout may outstrip demand for AI services.
- "I start to see the beginning of some kind of bubble": Chairman Joe Tsai expressed concern around datacenter construction, as Big Tech rushes to spend hundreds of billions on AI infrastructure. Questions arise as to whether the size of the commitment reflects the needs, or is too expensive.
- Major upgrade for the V3 large language model: The latest DeepSeek update claims to set the benchmark for accuracy and efficiency, with enhancements made in areas such as reasoning and coding ability. Given the attention the initial model launch provided, investors will be keen to see how the update is received by users.
4. Key Stocks to Watch on Tuesday
Oklo (OKLO 6.08%) soared almost 14% during market hours yesterday, but is down close to 10% ahead of the open after positive conversations with the U.S. Nuclear Regulatory Commission were followed by disappointing full-year results.
- 39 years of consistent dividend increases: Stock Advisor recommendation McCormick (MKC 0.63%) will report ahead of the opening bell, with investors watching for signs that sales are rising based on actual demand, not just price hikes.
- A video game retailer buying Bitcoin?: GameStop (GME +2.05%) is slated to release earnings after the market closes. Speculation is rife spare cash may be used to buy Bitcoin (BTC 0.04%), which could overshadow streamlining efforts and store closure announcements.
5. Foolish Fun
Think about an investment you made that went against conventional wisdom but turned out to be right. What gave you the conviction to stick with it? Discuss with friends and family, or become a member to hear what your fellow Fools are saying!
