1. Tech earnings and Gold taking center stage.

Google parent company Alphabet shed 8% after its fourth-quarter revenues missed expectations, driven by weakness in its Google Cloud and Traffic Acquisition Costs (TAC) segments. The company plans to invest $75 billion during 2025 to expand on its AI strategy, roughly $16 billion more than Wall Street expected.

Advanced Micro Devices fell 9% despite its earnings and revenue topping estimates. However, a revenue miss in its key data center segment sent shares spiraling. Despite 69% YoY growth, $3.86 billion in data center sales were well below the $4.14 billion anticipated by analysts. Analysts are concerned its gap with Nvidia is widening.

Meanwhile, Gold jumped to a new all-time high and has now made fresh all-time highs in 5 consecutive trading sessions.

The trade dispute with China continues to feed the allure of goldbullion as a store of value at the expense of Treasuries. China has been increasing its gold reserves at the expense of US Treasuries since the first trade war in 2017.

2. Some of the largest trade surpluses with the US are in Asia.

China would be most affected but India and Japan are better placed as domestic demand strength should provide more of an offset.

Although Europe is also exposed to tariff risk, tariffs could strengthen the US dollar, and European companies could see a potential offset from an FX tailwind due to a strong inverse correlation between the tariffs and changes to EUR/USD.

3. Apple’s hardware-centric business model makes it exposed to tariffs on Chinese imports.

The impact of tariffs on Apple’s business will depend greatly on whether the company decides to raise prices to compensate.

But lower sales could threaten an iPhone cycle that is already looking a bit weak.

David Vogt of UBS said tariffs of 10% could take 1% off Apple’s gross margins just from the iPhone business alone.

The world’s most valuable company can’t avoid a global trade war for long.

4. US Reshoring is an underappreciated driver of electricity demand over the next decade.

Although investors are focused on power demand from the growth of AI, Morgan Stanley analists believe US Reshoring is an underappreciated driver of electricity demand over the next decade.

“In an increasingly Multipolar World undergoing structural tech diffusion, they estimate US Reshoring can add ~200 bps of growth to the Industrial economy over the next two decades – a backdrop that would return the Industrial sector to positive power demand growth.”

US Industrial energy consumption has been stable due to efficiency gains but they expect return to growth following 25yrs of stagnation.

US Industrial Production is 26% of total US energy consumption.

5. Amazon is a leader in the "Physical AI" and Humanoids/Robotics.

Amazon has industrial robots that can increase efficiencies across the storage, inventory management, pick/pack, sorting and outbound stages of the order fulfillment process.

Given fulfillment costs make up almost 20% of Retail revenue (with labor making up an estimated ~60% of fulfillment costs), automation can have a significant impact on long-term profit.

If 30-40% of Amazon's U.S. units were fulfilled through next-gen robotics-enabled warehouses by 2030, it could lead to $10bn+ of savings.

6. In 2025, $9.2 TRILLION of US debt will need to be refinanced.

The US now holds $36.2 trillion worth of government debt, meaning 25.4% of the total is set to mature.

As they flood the market with bonds, bond prices fall and yields rise. It's simple supply and demand.

Source: Kobeissi Letter

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