Market Swings Amid Trump's New Tariffs

Late July delivered a sharp reality check as President Trump announced fresh tariffs on China, Canada, and Mexico. That move triggered one of the worst days for tech stocks all year, dragging the Nasdaq, S&P 500, and Dow Jones into the red. Friday closed with a weak jobs report, feeding investor anxiety about economic slowdown. Markets rebounded modestly Monday, but turbulence remained top of mind.

Palantir Earnings Surprise to the Upside

On August 4, Palantir reported its first-ever $1 billion-plus quarterly revenue. Total revenue jumped 48 percent year-over-year, with U.S. commercial sales surging 93 percent to $306 million, and U.S. government sales climbing 53 percent to $426 million. Net profit more than doubled to $326.7 million. The company raised its full-year revenue forecast to between $4.14 and $4.15 billion and set commercial sales guidance above $1.302 billion.

AI Demand and Defense Contracts Fuel Growth

Palantir is riding strong demand for its AI-driven data analytics from both government and business clients. Its November 2024 deal to consolidate U.S. Army contracts into a potential $10 billion, 10-year enterprise agreement underscores strategic momentum, even though it carries no guaranteed purchases. Analysts expect Army revenues to climb from roughly $400 million to $600 million annually.

What Comes Next: Nvidia and Broadcom in Focus

With Palantir setting the pace, all eyes now shift to Nvidia and Broadcom. Nvidia is expected to post a 47 percent rise in earnings to about $1 per share and a 52 percent jump in revenue to $45.7 billion in its August 27 results. Broadcom is projected to deliver 24 percent earnings growth to $1.66 a share and 21 percent revenue growth to $15.8 billion when it reports the next day. Both companies are trading near record highs and could signal if AI-led optimism holds or falters under tariff pressure.

Valuation: Bullish Fundamentals vs. High Risk

Analysts remain optimistic about Palantir's outlook but note that the stock trades at eye-watering valuations, more than 690 times earnings, making it one of the most expensive stocks in the S&P 500. Goldman Sachs, UBS, Citi, and others maintain cautious or neutral views despite acknowledging strong fundamentals. The same concern applies to Broadcom, which trades at around 45 times forward earnings even after solid revenue and income growth in fiscal Q2.

What It All Means

Palantir flipped the script with outstanding Q2 results. Strong quarter, upgraded guidance, booming AI demand, and massive defense contracts, everything lined up. But the stock’s valuation leaves little room for error.

Trump-era tariff threats continue to rattle AI chipmakers like Nvidia and Broadcom. They’re powerful players, but sensitive to policy shifts. Palantir’s early earnings win is a bright spot. Now, investors will be watching whether its momentum continues or if overvaluation risks catch up.

Let’s break it down:

• Palantir: delivered blockbuster numbers; stock at record highs; future hinges on sustaining revenue growth and managing lofty valuation.
  
  
• Nvidia & Broadcom: next in line; expected to deliver double-digit growth, but vulnerable to tariff surprises and market sentiment shifts.
  
  
• Market dynamics: volatility remains. Traders need strategies in place and eyes on which stocks weather downturns or bounce first.

Bottom line

Palantir just set a high-water mark. AI demand is fueling profits, but the stock trades at premiums reserved for proven giants. Nvidia and Broadcom are on deck next. If they meet or beat expectations, that bolsters confidence. Misses or tariff shocks? That could expose thin margins in lofty valuations. Stay alert, stay strategic.