AI Stocks Face Pressure As Tariffs Spark Inflation Worries

AI stocks are under pressure as tariffs spark inflation concerns. Despite recent declines, some analysts believe it's a good time to invest in companies like Amazon and Palantir Technologies, which stand to benefit from AI advancements.

Date: 09-03-2025

AI Rating: 6

Analysis of AI Stocks Amid Tariff Concerns

The report highlights the significant rise of AI stocks within the S&P 500 and Nasdaq over the past two years, boasting double-digit gains. However, economic uncertainties, including new tariffs introduced by the government, have resulted in a recent decline of more than 7% in the tech-heavy Nasdaq, particularly affecting AI stocks. While the immediate future appears challenging, analysts suggest that the long-term growth potential of these companies remains strong.

Impact of Tariffs and Economic Environment

Concerns raised regarding tariffs could potentially inflate costs for companies that manufacture outside the U.S., leading to increased operational expenses and further fueling inflation. This scenario might dampen consumer spending, ultimately reflecting negatively on revenue. Such economic headwinds could lead to a challenging environment for companies focusing on AI technology.

Amazon's Outlook

Amazon has leveraged AI to enhance its e-commerce and cloud computing sectors significantly. The company benefits from a robust $115 billion annual revenue run rate from its cloud computing arm, AWS. The report emphasizes Amazon's continuous growth in earnings, further driven by a revamping of its cost structure. With shares recently down more than 10%, they are trading at about 32 times forward earnings estimates, suggesting potential value for investors.

Palantir Technologies' Growth

Palantir Technologies also displays a strong growth trajectory despite recent challenges. The company experienced significant commercial growth, recording over $800 million in new U.S. contracts, a 134% year-over-year increase. This growth, coupled with its government business performance, positions the company favorably in the AI space. The report notes a decline in Palantir's stock price over the past two weeks, providing a more attractive entry point for growth investors, stating that the forward PEG ratio has fallen below 1, indicating a more reasonable valuation.

Stocks: AMZN PLTR