AI Stocks Face Headwinds Amid Economic Concerns

AI stocks have recently faced challenges as markets respond to economic uncertainties, including tariffs. While the Nasdaq dropped over 7%, some analysts argue it’s the right moment to invest in stocks such as Amazon and Palantir Technologies, which show promise in the evolving AI landscape.

Date: 09-03-2025

AI Rating: 6

Current Market Conditions - The report highlights a slump in AI stocks, with the tech-heavy Nasdaq falling over 7% in recent weeks due to economic concerns linked to tariffs on major trade partners like Canada, Mexico, and China. This situation is causing worry among investors regarding inflation and rising costs for companies that manufacture outside the U.S.

Company Insights - The report emphasizes Amazon and Palantir Technologies as potentially solid investments in the AI sector. Amazon is recognized for its significant revenue stream from Amazon Web Services (AWS), which has a reported annual revenue run rate of $115 billion. This segment of Amazon not only contributes robustly to overall profits but also integrates AI technology to generate efficiency.

Additionally, Amazon’s strategy of revamping its cost structure, coupled with its past earnings growth, positions the company favorably despite the recent price drop of its shares. This decline has made the stock more appealing, trading at approximately 32 times forward earnings estimates, down from over 45 times.

On the other hand, Palantir Technologies reports successful revenue growth in its commercial contracts, achieving a 134% year-over-year growth and closing over $800 million in U.S. commercial contract value, marking record-level performance. Despite facing headwinds from proposed budget cuts by the Pentagon, a major customer, the increasing trend in the commercial sector could provide significant growth opportunities.

Impact on Stocks - The concerns about tariffs and economic conditions present risks that could affect profit margins and revenue growth in the technology sector. However, the long-term outlook for AI stocks, particularly Amazon and Palantir, remains positive based on their operational efficiencies and growing commercial business.

Stocks: AMZN PLTR