TLDR
- The “TACO trade” describes market volatility tied to Trump’s tariff announcements – stocks fall on new tariffs but rebound when pressure eases
- Nvidia remains dominant in AI chips despite China export restrictions, with new contracts in UAE and Saudi Arabia plus potential $40 billion xAI deal
- Amazon’s AWS cloud unit continues strong growth and profit margins, making it less vulnerable to tariff impacts on e-commerce
- CoreWeave went public recently with revenue jumping from $189 million to $982 million year-over-year and a $25.9 billion revenue backlog
- AMD shows mixed results but strong data center growth and recent ZT Systems acquisition to compete better with Nvidia’s full-stack solutions
Stock markets have experienced unusual volatility in 2025, with major indexes returning to breakeven after double-digit declines just a month ago. The source of this turbulence has been traced to announcements from Washington, creating what traders call the “TACO trade.”
The TACO trade stands for “Trump always chickens out.” Markets drop when President Trump announces new tariff policies but rebound sharply when he eases pressure. This pattern has created ongoing uncertainty for investors throughout 2025.
Despite this volatility, artificial intelligence stocks continue showing strong fundamentals. Semiconductor and cloud infrastructure companies remain positioned for long-term growth as AI investment continues across industries.
Nvidia Maintains Market Leadership
Nvidia (NVDA) continues dominating the high-performance GPU market that powers AI applications. The company serves as a barometer for the entire AI industry, with its performance influencing investor sentiment toward the sector.
Cloud giants Amazon, Microsoft, and Alphabet continue building data centers and purchasing chips. Meta Platforms, Oracle, and Apple also represent major customers for Nvidia’s products. This demand supports Nvidia’s position in what analysts estimate as a multitrillion-dollar opportunity.
China export controls and competition from Huawei have created challenges for Nvidia. However, the company has secured new contracts in the United Arab Emirates and Saudi Arabia for AI data centers using its latest Blackwell GPUs.
Rumors suggest Elon Musk’s xAI startup could purchase approximately $40 billion worth of chips for its next GPU cluster. These developments could offset some China-related headwinds for the chip maker.
Nvidia’s stock price has recovered from recent lows. The company’s forward price-to-earnings ratio remains reasonable compared to historical levels, even after recent valuation expansion following strong quarterly earnings.
Amazon Leverages Cloud Infrastructure Strength
Amazon (AMZN) faces potential tariff impacts on its core e-commerce business. However, the company’s Amazon Web Services cloud unit continues accelerating sales and widening operating margins.
AWS generates the majority of Amazon’s operating profits. This provides the company with strong cash flow and operating leverage during uncertain economic times. The robust unit economics allow Amazon to reinvest in high-growth areas across its platform.
Amazon can integrate AI investments across e-commerce, logistics, retail, advertising, streaming, and healthcare services. This diversification strategy has attracted attention from investors including billionaire Bill Ackman, who recently added Amazon shares to his portfolio.
The company appears positioned to become Wall Street’s first $5 trillion market cap company. Amazon has previously navigated challenging regulatory environments while continuing to build profitable multibillion-dollar business units.
CoreWeave Captures AI Data Center Demand
CoreWeave (CRWV) completed its initial public offering this year as a pure-play investment in AI data centers. The company operates purpose-built facilities designed specifically for AI workloads, differentiating it from legacy data center operators.
Revenue surged from $189 million in Q1 2024 to $982 million in Q1 2025. The company reported a massive revenue backlog worth $25.9 billion, representing 63% growth year-over-year. Much of this increase came from an $11.9 billion deal with OpenAI.
CoreWeave generates revenue through both contracts and on-demand services. Most revenue comes from multi-year contracts, providing high visibility for future earnings. This business model typically commands premium valuations from investors.
The company operates 33 AI-optimized data centers across the US and Europe with 420 megawatts of power capacity. CoreWeave has contracted for additional power providing up to 1.6 gigawatts over multiple years to support expansion plans.
AMD Pursues Nvidia Alternative Strategy
Advanced Micro Devices (AMD) shows mixed performance across business segments but maintains strong data center momentum. Revenue fell 3% quarter-over-quarter but increased 36% year-over-year, driven by data center demand and PC processor sales.
The company’s data center and client segments show strong growth while gaming and embedded segments face weakness. High-margin data center chips contributed to 55% year-over-year growth in adjusted earnings despite segment headwinds.
More than 30 computing workloads recently launched using AMD’s fifth-generation EPYC Turin chips across major cloud providers. These include deployments at Alibaba, Amazon, Google, and Oracle data centers.
AMD acquired ZT Systems to provide complete AI computing systems combining chips, networking, and software. This acquisition allows AMD to offer full-stack solutions similar to Nvidia’s approach and compete more effectively for data center business.
Management expects recovery in the embedded chip business during the second half of 2025. AMD trades at 28 times 2025 earnings estimates, which appears attractive given the company’s growth prospects and strategic positioning.
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