New tariff threats crush stocks during a big week for Nvidia and key portfolio moves

US markets experienced a significant downturn on Friday, with the S&P 500 falling 2.71% and Nasdaq 3.56%, primarily due to President Trump's announcement of new 100% tariffs on Chinese imports and export controls. In the tech sector, Nvidia faced market reactions to AMD's OpenAI deal and Oracle's reported thin margins on Nvidia chip rentals, though CEO Jensen Huang defended long-term profitability and underscored the strategic importance of US AI leadership. Meanwhile, Nike's CEO detailed a multi-year turnaround strategy for its China operations, and an investment club adjusted its holdings, increasing exposure to AI infrastructure beneficiaries like GE Vernova and Corning while trimming BlackRock and Salesforce.

Analysis

U.S. markets saw significant declines on Friday, with the S&P 500 down 2.71% and Nasdaq 3.56%, primarily due to President Trump's announcement of new 100% tariffs on Chinese imports and export controls on critical software, effective November 1. These retaliatory measures, coupled with the ongoing government shutdown, fueled broad market uncertainty.

The AI sector presented mixed signals: AMD shares surged 24% on an OpenAI chip deal, while Nvidia's CEO Jensen Huang defended the long-term profitability of cloud providers like Oracle, despite Oracle reporting thin 14% gross margins on Nvidia chip rentals. Huang emphasized U.S. leadership in generative AI as critical for national security and economic growth.

An investment club strategically increased exposure to AI infrastructure beneficiaries, upgrading GE Vernova to a "buy-equivalent 1 rating" for its data center energy solutions and adding Corning to its watch list for fiber optic demand. Conversely, Salesforce shares were trimmed due to AI's impact on enterprise software, and a BlackRock position was reduced to fund new investments.

Nike's CEO outlined a multi-year turnaround plan for China, focusing on sports-themed retail, acknowledging a prolonged path to profitable growth. Despite positive teen survey data, Nike's stock declined over 9% this week and 14% year-to-date, reflecting continued market skepticism regarding its strategic initiatives.

Key Decisions for Investors

• Monitor escalating U.S.-China trade tensions and their potential impact on global supply chains and technology sector profitability, considering rebalancing exposure to affected regions or industries.
• Consider increasing exposure to AI infrastructure enablers like GE Vernova and Corning, which are positioned for growth from the increasing energy and connectivity demands of AI data centers.
• Evaluate AI-related investments with nuance, distinguishing between direct beneficiaries and strategic partners, while assessing the long-term profitability of cloud services leveraging AI hardware.
• Exercise caution with multi-year corporate turnarounds like Nike, as near-term stock performance may remain volatile despite long-term strategic plans and positive survey data.