Tariffs, Tech, and Turnaround Tuesdays: Where Markets Are Headed Next

Tariffs, Tech, and Turnaround Tuesdays: Where Markets Are Headed Next

Stocks initially opened lower after both Alphabet (GOOGL) and AMD missed earnings expectations. Google's stock fell over 7%, while AMD dropped nearly 9% after reporting a 54% decline in consumer GPU market share.

However, sentiment reversed on Tuesday, and despite Alphabet and AMD remaining in the red, the broader market rebounded. Nvidia (NVDA) surged 5.3%, while Tempus AI (TEM) jumped 11.85%, reflecting continued enthusiasm for AI-related stocks.

The VIX declined sharply, dropping 8.5%, while the Nasdaq managed to finish in positive territory, gaining 0.19%. It was a classic Turnaround Tuesday, with the S&P 500 now hovering near its all-time high. Markets have largely shaken off tariff concerns, as Trump secured last-minute reprieves for Canada and Mexico, easing trade tensions.

Alphabet Inc. (GOOGL) Option Idea

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Alphabet's recent earnings report received a muted response, primarily due to a revenue shortfall and a larger-than-expected increase in capital expenditures. The company announced plans to invest approximately $75 billion in capital spending for 2025, well above Wall Street's expectation of $57 billion.

In contrast, Nvidia's stock climbed, driven by strong demand for its AI chips. Initial assumptions about DeepSeek's lower costs proved inaccurate, as the company still relied heavily on Nvidia's hardware, with a total capital investment in servers estimated at $1.6 billion. According to SemiAnalysis, DeepSeek operates a large-scale computing infrastructure with approximately 50,000 Nvidia Hopper GPUs, including 10,000 H800s and 10,000 H100s, with additional H20 units on order.

Despite Alphabet's higher spending, we remain bullish on the stock. This morning, we executed an options trade on Alphabet (GOOGL), which has already appreciated by 40%. Taking advantage of low premiums when market sentiment is weak has been a key strategy in capturing these gains.

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The information provided on Punk Rock Traders is for general informational and educational purposes only and does not constitute legal, tax, accounting, financial or investment advice. The statements in this document should not be viewed as an objective or independent explanation of the matters discussed. Please be aware that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on trading ahead of the dissemination or publication of investment research.

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The performance of option ideas is provided "as is" without any warranties regarding accuracy, timeliness, or precision. The performance of each trade idea based on the initial premium or price level specified by the original author in the report. Trade idea performance will default to profitability at +40%, and the best performance will be shown. Otherwise, the latest data point will be used for the basis of performance calculation from our data provider.

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