What Trump's tariff hikes could mean for Apple & Amazon
Yahoo Finance Senior Reporter Brooke DiPalma, Principal Asset Management chief global strategist Seema Shah, and Yahoo Finance Senior Business Reporter Ines Ferré join Opening Bid host Brian Sozzi to discuss the newest tariff headlines in relation to Big Tech.
To watch more expert insights and analysis on the latest market action, check out more Opening Bid.
I was listening to Tim Cook on that earnings call last night and I was laughing to myself in the sense I'm he's talking about a 1.1 billion dollar hit from tariffs this quarter and my thought was while the market's going to completely ignore this. But maybe they shouldn't. Uh that is over a billion dollar hit because of tariffs. And I think it says everything as to why we got this bad jobs report and why stocks are being sold off.
Yeah, we are getting more commentaries from companies regarding the hit that they will be taking with respect to tariffs. I mean, we have seen this already with the automakers and we are now seeing it with Apple with them expecting to take an even bigger tariff as you just mentioned for the next quarter. Look, as far as Amazon's concerned as well, Andy Jassy talking about the sort of the lack of clarity where all of these tariffs all of these tariffs will land and especially with China. I think that these are big questions for companies. They are trying to sort this. Wall Street has believed so far that this is manageable as we do see these deals that have been coming through, but nevertheless, uh the impact, the longer term or or or midterm impact that these will be having, we are starting to hear more and more commentary from these CEOs about that impact.
And uh Brooke, I loved how Andy Jassy, of course, the Amazon CEO just hopped on that call, uh didn't really acknowledge that they may or may not be raising prices, said tariffs, they're out there, maybe they're hurting us, maybe they're not, we're not going to tell you Wall Street on this call. But what caught my attention was, while the revenue accelerated for Amazon web services, the margins were under pressure a little bit, and the street generally does not like the numbers from that key cloud business, and that's why the stocks under pressure.
Yeah, certainly. When you compare what we saw with Amazon's web services and you take what we saw, the strength that we saw for both Microsoft and Meta, that certainly put Amazon's web service into question especially when it came to that Q3 operating income guidance and that certainly put pressure on the street. And if you take a look now in these early hours of trading, we're seeing Amazon down even more, down more than 6%. And if you take a look at the week that we've had so far leading up to this report, we saw some momentum for Amazon, some optimism after we heard from both Microsoft and Meta that this cloud, this web services would perform well. And then what we saw is that major sell off after Thursday now and this open, but this is a completely different story. You look at Microsoft and you see this ongoing momentum. Of course, down a little bit under pressure this morning, based on the jobs report. We also got the latest tariff news, but same for meta, this ongoing momentum, really showing that AI cloud, you have to win in this game, you have to outperform your peers, and that's the story that played out overnight.
Real quick, uh 30 seconds in my last word to you. Uh what are you inclined to do if one is uh over allocated to big cap tech stocks uh after this earning season? I mean is it do you stay long until end of the year or do you lighten load a little bit?
No, I think you need to stay in this. I mean look, companies, any company which has exposure to international supply chains is going to be feeling the headwinds of tariffs. The thing that you want to be focused on is which is a company which has got the strong balance sheet, the cash flow, etc. which is able to withstand and deal with those headwinds, and I think that still points to some of these these big tech firms. AI is still going to be the frontier of productivity growth in the future and I think it's it's really important that investors is looking through some of the tariff noise and looking at that long-run balance sheet strength.
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