We're Planning Some Moves as Trump Delivers Tech Tariff Exemptions

Late Friday it was revealed that smartphones, laptop computers, memory chips, and other electronics will be exempt from President Trump’s so-called reciprocal tariffs. Other products that were also announced as being exempt included computer monitors, tablets, Apple watches, and computers from the tariffs. The president is expected to issue some clarifying comments later Monday, which could include sector tariffs in some cases and more specific exemptions. Trump is still expected to impose tariffs on some additional sectors, such as lumber and pharmaceuticals.

Given the collection of CEOs near him on Inauguration Day, including those from Apple AAPL, Meta META, Alphabet GOOGL, Amazon AMZN, and, of course, Elon Musk, we would not be surprised to learn they have been hammering Trump about the impact of his tariffs on those products and their businesses. We’ll stop short of saying this sounds like crony capitalism and instead focus on how this latest potential rollback should benefit the tech sector and several TheStreet Pro Portfolio holdings.

Still, developments over the weekend signal we are likely to see other sectoral tariffs on tech products and semiconductors in a month or two once a Section 232 investigation is completed. A Section 232 allows a president to adjust imports that pose a threat to national security, like we’ve seen with sectoral tariffs for autos and expect to see for pharmaceuticals. Odds are these tech and chip sectoral tariffs will be far less onerous than the 145% combined tariffs on other China imports, but the back and forth over the last few days only inject another round of uncertainty into the equation.

Adding to the uncertainty, China has suspended exports of certain rare earth minerals and magnets that are crucial for automakers, aerospace manufacturers, semiconductor companies, and military contractors around the world. Odds are companies stockpiled rare earth elements over the last several weeks as tariff talk heated up, but how long those stockpiles may last is bound to become a question on March-quarter earnings season conference calls. With that in mind, we see this move by China as a reminder there are more ways than just tariffs to impact trade and the global economy, and also as a way to bring Trump to the negotiating table.

When we net out the above developments, we see it as likely less onerous and because of that, plan to step in and incrementally add to several positions on our shopping list. As we get more clarity on Trump’s sectoral tariffs and other trade-related developments, we’ll look to put more capital to work toward our existing shopping list, Bullpen candidates, and other stocks that land on our radar.

First Google, Then Amazon Reaffirm 2025 Capital Spending Plans

Last week, it was reported that Alphabet CEO Sundar Pichai said the company was still committed to spending around $75 billion on building out data center capacity to support AI. 

We’re also reading reports that Google may be looking to tap newly public hyperscaler CoreWeave CRWV for capacity. CoreWeave recently picked up OpenAI as a customer of size following an $11.9 billion contract award and these fresh reports Based on what’s being reported it appears Google is seeking more access to Nvidia NVDA Blackwell chips, which we all know are facing capacity constraints.

Meanwhile, during its December-quarter earnings call, based on the $26.3 billion spending in that quarter, Amazon telegraphed its 2025 capital spending would be around $105 billion for this year. In his 2024 shareholder letter published late last week, Amazon CEO Andy Jassy echoed the need to spend big on AI now:

"In AWS, the faster demand grows, the more datacenters, chips, and hardware we need to procure (and AI chips are much more expensive than CPU chips). We spend this capital upfront, even though these assets are useful for many years (in the case of datacenters, for at least 15-20 years). We only start monetizing this capital investment many months after we spend the capital, and over many years—which leads to attractive long-term FCF and ROIC (as people have seen in AWS over the last several years). But in periods, like now, of unusually high demand (our AI revenue is growing at triple-digit YoY percentages and represents a multi-billion-dollar annual revenue run rate), you’re deploying a lot of capital. We continue to believe AI is a once-in-a-lifetime reinvention of everything we know, the demand is unlike anything we’ve seen before, and our customers, shareholders, and business will be well-served by our investing aggressively now."

In his shareholder letter, Jassy also shared some about Amazon’s AI efforts

"… there are more than 1,000 GenAI applications being built across Amazon, aiming to meaningfully change customer experiences in shopping, coding, personal assistants, streaming video and music, advertising, healthcare, reading, and home devices…"

These and other data points about AI adoption, the expanding use of AI, and data center demand keep us bullish on shares of ServiceNow NOW, Elastic ESTC, Nvidia, Marvell MRVL, and others. 

At the time of of publication, TheStreet Pro Portfolio was long AAPL, META, GOOGL, AMZN, NOW, NVDA, ESTC and MRVL.