As expected after President Trump’s tariff reversal following the “Liberation Day”, more signals are coming in that market stability is now prioritized.
After all, when the bond market was spooked, which was the opposite to the favorable scenario either Treasury Secretary Bessent or President Trump preferred, it showed that the global trust in USG’s fiscal and monetary competence is waning.
To start restoring confidence, President Trump clarified late Tuesday that the firing of the Fed Chair Jerome Powell is not on the table, signaling system continuity. When it comes to trade war with China, Trump’s stance is now significantly more conciliatory, having stated that tariffs “will come down substantially but it won’t be zero”.
In short, rather than boost domestic manufacturing first and then impose tariffs from a stronger position, President Trump’s shortcut attempt has backfired. In the meantime, the signals to de-escalate and return predictability to the markets have already boosted the S&P 500 (SPX) index over the day by 2.4%.
Rising from the worst-case scenario, here are two stocks investors should consider.
1. Dell Technologies
Over the last three months, Dell (NYSE:DELL) stock is down nearly 21%, presently priced at $90.74 per share. At the end of 2024, we extensively covered Dell’s major moves to support AI demand in collaboration with Nvidia (NASDAQ:NVDA).
As a legacy PC vendor, the company ranks third in global PC shipments, desktop and mobile. After the acquisition of EMC, Dell expanded its portfolio into full-stack IT solutions, which was just the right move to prepare for the AI surge. The center of this plan is Dell AI Factory, offering enterprises servers, storage, networking and data protection as they invest in AI.
But because these systems, from printed circuit boards (PCBs) to semiconductors, are deeply integrated into China’s supply chain, tariff escalation would greatly harm Dell’s globally interconnected rollout of products.
Throughout 2024, Dell beat all earnings per share (EPS) estimates, typically at around 4% positive surprise. The company is scheduled to report the next earnings on May 29th, which is plenty of time for tariffs to fade out of the public spotlight. For the next quarter, Dell has to beat the EPS forecast of $1.47, which is higher than the reported year-ago quarter EPS of $1.04.
Per WSJ forecasting data, the average DELL price target is $127.57 per share. Dell’s current stock price of $90.74 is aligned with the bottom price target of $89 per share, making this an optimal exposure entry.
2. KLA Corporation
KLA Corporation (NASDAQ:KLAC) stock is down nearly 13% over the last three months, presently priced at $660.81 per share. KLA’s cutting-edge tools can be found wherever there is need to ensure quality control in semiconductor manufacturing. In other words, for chip manufacturers to elevate their operating margins they have to increase yield.
This is what makes KLA so indispensable. The company revenue mainly comes from tool sales, at 75%, while the rest comes from supporting services such as installation, maintenance, training and upgrades. To stay above the competition, a large chunk of KLA’s revenue is poured into R&D.
In the last earnings in January for fiscal Q2 2025, the company reported $3 billion revenue, of which $346 million went into R&D. For the quarter, KLA delivered $825 million net income compared to $582.5 million in the year-ago quarter, once again confirming strong AI chip demand.
Given KLA’s few competitors in this highly complex niche, the suppression effect from tariffs was not as substantial. Nonetheless, for value investors with a long-term view, this would be an opportune moment to have an exposure to such a wide moat company.
Against the present price of $660.81, the average KLAC price target is significantly higher, at $805.96 per share according to WSJ’s aggregated forecasting data. The bottom target is lower than the current price range, at $590, pointing to the market’s positive perception of KLA even in high macro uncertainty.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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