Market Volatility Amid Trade War Concerns Boosts Certain Tech Stocks

The ongoing threat of a trade war and fluctuating tariffs has led to significant volatility in the Stock market in recent weeks. While the market has faced a persistent correction, recent positive developments have prompted investors to push stocks upward from their recent lows. Notably, good news over the weekend triggered a broad rally to start the week.

With this backdrop, artificial intelligence (AI) specialist Palantir Technologies (NASDAQ: PLTR) surged 4.6%. Similarly, Micron Technology (NASDAQ: MU) increased by 2.6%, and Apple (NASDAQ: AAPL) climbed by 2.4%, as of 11:52 a.m. ET on Monday.

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Uncertain Tariff Landscape

On Friday, a memo from U.S. Customs and Border Protection indicated a temporary exclusion from the 145% tariffs imposed on certain electronics sourced from China. This exclusion covered products such as smartphones, semiconductors, and chipmaking equipment. Many investors viewed this as a positive sign, especially given concerns that a prolonged trade war could hinder the adoption of AI technologies.

Wedbush analyst Dan Ives commented that by implementing this exclusion, the White House “removed the doomsday scenario from consideration”, predicting that tech stocks would rally as investors feel relieved.

However, this sense of certainty quickly faded. Secretary of Commerce Howard Lutnick clarified in a weekend interview that the exemption is temporary, and electronics will still face tariffs in the coming months, affecting products like smartphones and computers.

On Monday morning, President Trump sought to clarify that these products would not be exempt; rather, “they are simply being moved to a different Tariff ‘bucket.'”

In company-specific news, NATO announced that it has finalized the acquisition of Palantir’s Maven Smart System, intended for use at NATO’s Allied Command Operations military headquarters. The sale was officially completed on March 25.

Palantir’s system will enable NATO to incorporate various advanced systems, including new AI models and advanced simulations. Some investors had expressed concerns over potential adverse impacts on Palantir’s results due to anticipated spending cuts from the U.S. Department of Defense. Nonetheless, the ongoing demand for improved military capabilities suggests that Palantir may actually gain from modernization initiatives that replace outdated systems.

Capitalizing on AI Adoption

Although the AI sector has been thriving for the past few years, many experts believe its full integration into various industries is still just beginning. Each of the three highlighted stocks is positioned to benefit from favorable long-term trends:

• Palantir’s AI Platform (AIP) has seen substantial adoption, which has driven accelerating sales and profits.
• Micron is a leading manufacturer of memory (DRAM) and storage (NAND) chips, integral components in AI processing.
• Apple is expanding its AI initiatives across 2.35 billion devices, enhancing its products and services.

Concerns remain regarding how an extended trade war and tariffs might inhibit AI adoption by increasing the costs of semiconductors and related products. However, continued innovation in the sector is likely to drive further AI adoption, benefiting these three companies.

From a valuation standpoint, Palantir remains expensive, trading at 165 times forward earnings. In contrast, Apple and Micron appear more attractively priced at 28 times and 10 times forward earnings, respectively.

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Danny Vena has positions in Apple and Palantir Technologies. The Motley Fool has positions in and recommends Apple and Palantir Technologies. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.