Betting On The Trade War: 3 Stocks That Could Win If Global Tensions Intensify

Amidst escalating trade war rhetoric, particularly concerning semiconductors, the article highlights three stocks positioned to thrive: ON Semiconductor, Lockheed Martin, and Palantir. ON Semiconductor offers a tariff-proof model with domestic fabs and a compelling valuation (20x forward earnings vs. peers at 37-40x). Lockheed Martin provides a defensive hedge, benefiting from increased defense spending with stable cash flow and a fair valuation (18x forward, 3% dividend). Palantir, while high-risk, is a bet on AI and defense tech amid rising tensions, but its 140% YTD surge has resulted in a significant valuation (278x forward earnings).

Analysis

Heightened geopolitical tensions, specifically the threat of 100% tariffs on foreign semiconductors, are creating distinct investment opportunities in companies insulated from or benefiting from protectionist policies. ON Semiconductor (ON) is positioned advantageously due to its domestic manufacturing facilities, aligning it with reshoring trends in high-growth sectors like electric vehicles and industrial automation. Critically, its valuation at approximately 20 times forward earnings presents a significant discount compared to peers such as Nvidia (40x) and Broadcom (37x), offering an attractive entry point for a tariff-resilient business. In contrast, Lockheed Martin (LMT) serves as a classic defensive macro hedge. Its performance is correlated with rising defense spending, and its long-term government contracts provide stable cash flow. Trading at 18 times forward earnings with a 3% dividend yield, LMT is fairly valued and offers stability and income rather than high growth. Finally, Palantir (PLTR) represents a high-risk, high-reward proposition. While its AI and data infrastructure business is highly relevant to increasing national security spending, the stock's 140% year-to-date surge has driven its valuation to an exceptionally high 278x forward earnings, leaving minimal margin for error and making it a speculative bet on continued geopolitical instability.

Key Decisions for Investors

• Investors seeking growth at a reasonable price within the semiconductor space should consider ON Semiconductor, as its domestic operations provide a buffer against potential tariffs and its 20x forward P/E is notably lower than industry peers.
• For those prioritizing capital preservation and income in a volatile macro environment, Lockheed Martin offers a defensive position with a steady 3% dividend yield and a business model that benefits from increased defense spending.
• Extreme caution is warranted with Palantir; its 278x forward earnings multiple after a 140% price surge makes it a highly speculative investment suitable only for investors with a high risk tolerance betting on significant escalation in geopolitical conflict and defense-tech contracts.
• Consider balancing portfolio exposure by using ON for tariff-hedged tech growth, LMT for defensive stability, and treating PLTR as a tactical, high-beta play on geopolitical friction.