Over the week, the Trump admin suffered a heavy credibility blow. Only shortly after introducing the term “panican”, describing people stressing over market instability as “weak and stupid”, President Trump himself became a panican. Namely, after the 10-year Treasury yield went over 4.5%, he abruptly backflipped from global reciprocal tariffs.
Reminder, the rising Treasury yield is the exact opposite of what both President Trump and Treasury Secretary Bessent want.
“He and I are focused on the 10-year Treasury and what is the yield of that.”
Treasury Secretary Scott Bessent on Fox Business
The sudden tariff reversal was on the same day they were set to take effect. On Wednesday, the new policy is a 90-day suspension of tariffs for most nations, excluding the baseline 10% rate. However, the trade war against China seems to be escalating, with tariffs increased to 125%, (145% if counting the previous 20%) to which China retaliated with equal measure of 125% on US imports.
While this is concerning, investors should remind themselves there has been a bipartisan consensus among the U.S. ruling class, spanning many decades, to transform China into the world’s manufacturing hub.
But in the present, China-reliant companies are likely to suffer. And at times like this suppressed valuation, one should consider their exposure, based on their long-term fundamentals.
1. Advanced Micro Devices
In 2024, the Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC) rival made most of its sales in the US at 34.45%, with China just behind at 24.70%. Moreover, AMD (NASDAQ:AMD) has experienced far greater growth in Asia year-over-year.
Year-to-date, AMD stock is down 23%, currently priced at $92 per share. However, a regular customer of AMD products would think otherwise. The company’s Ryzen series of CPUs continues to trample competition, with the latest X3D series becoming top performers for both gamers and content creators.
Owing to 3D V-Cache innovation, AMD’s Ryzen CPUs firmly restored performance leadership over Intel while also being energy efficient. On the GPU front, although AMD’s RDNA 4 architecture failed to outperform Nvidia high-end offering, Nvidia greatly fumbled the launch of its RTX 50 series GPUs.
At the same time, AMD offered cost-effective GPUs, lacking QC issues that seem to plague the RTX 50 launch. In short, AMD is likely to significantly increase both CPU and GPU market shares in the following upgrade cycles, having already achieved a record 45% GPU market share in Japan.
And the way trends are, tariffs may not even be on anyone’s radar in a few months. In the meantime, AMD has proven time and time again to deliver highly competitive products just when they are needed.
According to WSJ, the average AMD price target right now is $145.70 against the present price of $92 per share. This price aligns with the estimated bottom target of $90, which makes AMD stock an excellent opportunity at this point in time.
2. Lam Research
We covered Lam Research (NASDAQ:LRCX) in September 2024, just before its 10-for-1 forward stock split. At that time, LRCX was considered undervalued due to the company’s critical contribution in supplying the world’s chipmakers with equipment while Nvidia captured the public spotlight (as a chip designer).
Lam’s products, in particular selective etch systems Argos, Prevos and Selis, are widely used by all semiconductor players, from Samsung (KS:005930) and Micron (NASDAQ:MU) to TSMC and Intel. Given the complexity and delicacy of Lam’s products, the company has a wide moat.
And that moat is constantly expanding as chipmakers like Intel expand to service national security needs. While it is true that 31% of Lam Research revenue comes from China vs just 9% from the US, as of end 2024, this represents a diversified risk. After all, China-linked sales are owed to multinationals, not purely domesting Chinese firms.
At the end of the line, Lam’s etching dominance makes it irreplaceable for both the US and friend-shoring allies like Taiwan, Japan and South Korea. While geopolitical tensions may reshape where chips are made, Lam’s moat lies in how they’re made — a process its tools uniquely enable, regardless of borders.
Year-to-date, LRCX stock is only down 10%. Per WSJ forecasting data, the average LRCX price target is $96.31 per share. Against the present price of $65 per share, the bottom estimate of $75 is significantly higher.
3. Tesla
The premium US electric vehicle maker has a 35% YTD stock slump. As Elon Musk took the mantle of politics, he transferred that vulnerability to the company. This even resulted in street-level action against Tesla car owners, putting in doubt Tesla Inc (NASDAQ:TSLA)’s very brand. Additionally, heavily controlled media apparatus in the EU has already resulted in a 40% sales drop year-over-year.
Moreover, ~21% of Tesla’s revenue comes from China. When it comes to tariff, it is notable that Elon Musk is not quite on the same page as President Trump, having said this during the Biden admin:
“Tesla competes quite well in the market in China with no tariffs and no deferential support. In general, I’m in favor of no tariffs,”
Although Tesla is better positioned than other EV makers, the company still has substantial outsourcing for auto components. Accordingly, when the tariffs were first announced, Musk said on X that the “tariff impact on Tesla is still significant.”
But with all these headwinds, why would TSLA exposure be optimal now? Ahead of Q1 2025 earnings on April 22nd, Tesla still has substantial capacity to pivot, innovate with a robust FSD, and dominate the long-term EV transition with robotaxis.
This early on in the Trump admin, China risks are likely overstated. The same applies to branding issues as the astroturfed backlash loses its vigor, and as the Trump admin treats assailants as “domestic terrorism”.
At present $245, TSLA stock reverted to early November 2024 level, just after the Robotaxi Day event. With progress on FSD and cheap Model 2, this may end up being a rare discount opportunity.
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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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