Breakfast News: Auto Levy Green Light
March 27, 2025
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Source: Image created by Jester AI.
1. Auto Tariffs Spark Chatter
President Trump confirmed the U.S. will impose 25% tariffs on imports of foreign-made cars starting April 2, saying although Tesla (TSLA -5.06%) CEO Elon Musk didn't advise on the matter, it might be good for the company given its domestic assembly plants. Musk later posted "Tesla is NOT unscathed here. The tariff impact on Tesla is still significant" on X.
- "Large scale tariffs, far larger than currently planned, will be placed on them": Countermeasures to the auto tariffs are already being prepared by the EU, with Trump responding there would be large repercussions if the EU joined forces with Canada on trade policy.
- "I would be wary of assuming that the impact of tariff increases on inflation will be entirely temporary": St. Louis Fed president Alberto Musalem flagged the indirect effects of tariffs could have a more persistent impact on inflation than many think. If more voting members start to share his view, it could delay future interest rate cuts.
2. Rumored AI Capex Cuts
Bloomberg reports Microsoft (MSFT -3.67%) has withdrawn from more AI capacity leasing projects, as it looks to not directly support additional training workloads from OpenAI.
- Microsoft has an $80 billion AI spend commitment in 2025: Concern remains that promises from large players around AI capex spend will be trimmed this year, as investor concern around slow payoffs and the rise of cheaper Chinese alternatives weighs on valuations.
- Pulling back on two gigawatts over the past six months: The news triggered a fall in stocks linked to AI infrastructure, with Super Micro Computer (SMCI -4.57%) closing down almost 9% and Nvidia (NVDA -7.03%) by almost 6%. Fool analyst Seth Jayson wonders if "this headache [is] a symptom of something more serious ... Trillions in market cap are at stake."
3. Cloudflare Shifting From Cybersecurity?
Tim Beyers
Under the Radar
[Fellow Fool analyst Jason Moser flagged a notable call Tuesday: Bank of America (BAC -1.70%) upgraded Cloudflare (NET 0.39%) for its growing role in AI.]
I don't know that it's a shift so much as it's indicative of Cloudflare's long-term push to become the fourth Big Cloud provider after AWS, Azure, and Google Cloud. The company has added services on its journey to achieve scale, including AI as a Service.
What makes Cloudflare unique is that it's built to serve the edge. Instead of concentrating in a few massive data centers, Cloudflare has points of presence in 335 cities and 125 countries around the world. That reach means it could one day be possible to get AI compute into the hands of 95% or more of the internet-connected population with just a few clicks.
Will that be as functional as owning your own AI data center? No, of course not. But most of the world won't want or need that -- and Cloudflare may be perfect for their needs.
4. Next Up: From RV Earnings to GDP Learnings
Winnebago Industries (WGO 0.14%) is slated to release Q2 earnings ahead of the market opening, with investors watching out for any order backlogs or trends to show demand, along with dealer inventory levels.
- Twice recommended in 2022: Rule Breakers recommendation Braze (BRZE -1.84%) will report after the market closes. Performance on the customer retention rate as well as growth in the monthly active users will help to guide shareholders on the platform's relevance in the market right now.
- Data dump to pore over: Q4 Gross Domestic Product (GDP) data is forecasted to match the previous reading of 2.3%. Pending Home Sales for February is expected to highlight a 1.5% month-over-month growth, while Initial Jobless Claims are slated to rise modestly from 223k to 225k this week.
5. Foolish Fun
Reporting later today, Lululemon (NASDAQ:LULU) is a good example of a non-tech company leveraging AI across their business (building on the existing competitive moats it has in its brand, reach, etc).
Where else have you been most impressed by their application of artificial intelligence, outside of traditional tech stocks? Discuss with friends and family, or become a member to hear what your fellow Fools are saying.
