The first 100 days of Donald Trump’s presidency have been bad for the stock market. Since Trump took office on January 21, the Dow is down 7.23%, the S&P 500 is down 7%, and the economy contracted by 0.3% in Q1. It looks like the first chapter of an impending recession. Some companies, however, are making a silk purse of this sow’s ear economy. Take Palantir, the tech, surveillance, and military contractor co-founded by chairman Peter Thiel and CEO Alex Karp.

Thiel named the company for the seeing stone in J.R.R. Tolkien’s Legendarium, a compendium of background myths for The Lord of the Rings. Palantir was intended to use software similar to PayPal’s fraud recognition systems to “reduce terrorism while preserving civil liberties.” Instead, it became a data-mining and surveillance juggernaut, selling its data analysis services to governments and private companies. Palantir’s software was reportedly behind the intel that led SEAL Team 6 to capture Osama bin Laden in 2011.

Palantir’s growth has been nothing short of spectacular, with the share price up 586% since the beginning of 2023, and this year it is the best performer among companies valued at $5 billion or more, according to FactSet. What’s behind the rise? Palantir’s artificial-intelligence-enabled tools, which allow clients to mine vast data sets for insights and patterns, and, Palantir claims, give them a competitive edge.

They have helped it win defense and software contracts with key U.S. government agencies, including the military. In the fourth quarter, its government revenues jumped 45% year-over-year to $343 million. The past two years’ growth was helped by Palantir’s inclusion in both the S&P 500 and the Nasdaq. And that is only likely to accelerate under the Trump administration, as DOGE drives efforts to outsource tech work to save money, William Blair analyst Louie DiPalm told CNBC.

“Palantir’s business model is highly aligned with the priorities of the Trump administration in terms of increasing agility and being very quick to market,” he said.

The visibility of these government contracts has boosted Palantir’s growth in the corporate sector.

“When you think about macroeconomic concerns, you as a company need to be more efficient, and this is where Palantir thrives," said Bank of America analyst Mariana Pérez.

That positions Palantir for a vast increase in private-sector contracts, which could fuel further growth.

The rapid growth in the midst of an AI arms race, and its “strategic positioning in the AI-value chain” have Morningstar analyst Mark Giarelli convinced Palantir could be “the next software juggernaut.” He’s raised his fair value estimate to $90 from $79. He sees a huge boost from DOGE contracts, and particularly from Palantir’s AI platform, which he calls “a revenue accelerant” for its adaptability: “While most of this customer and revenue acceleration is driven by US enterprises, even a fraction of this growth replicated in Western Europe could provide additional upside to our valuation.”

Meanwhile, analyst Joseph Bonnar at Argus warned in a recent note that Palantir’s biggest challenge may be running out of high-end clients who need and can afford its tailor-made AI models. In fact, Palantir leaders have complained that European companies are not buying its products because of an anti-American bias. That’s a problem, or at least it is for now, as its use by the US. national security community means sales are limited to vetted U.S. allies.

Argus’s Bonner points to the leadership of Karp, whom Time Magazine called “an unashamed techno-nationalist who evangelizes Western power,” as a potential restraint in sales in Europe, suggesting that clients could shun Palantir for its political stances, much as Tesla has lost sales due to Elon musk‘s political activism.

“Mr. Karp takes wide-ranging political outspokenness to another level,” wrote Bonner. While he still has a buy on Palantir, noting its 78% operating profit growth in the fourth quarter of 2024 (first quarter results are in next week), he wrote that Palantir shares are up more than 500% in the past 12 months. That, he said, makes Palantir “perhaps too richly valued for the company fundamentals to handle.”

Indeed, Palantir is valued at about 185 times earnings—one of the highest price-to-earnings multiples in software, and a position that makes its future something of a tightrope walk.

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The Usual Suspects

• Is Pichai panicking? Google CEO Sundar Pichai wants the federal judge running the trial of his company on antitrust charges to reject the Justice Department’s plan to force Google to break up its search business. Judge Amit Mehta already ruled that Google holds an illegal monopoly over online search. He’s now hearing arguments over how to restore competition. Pichai sounded a bit nervous as he warned of the consequences of opening up Google’s search engine to legal competition. “It would be trivial to reverse engineer and effectively build Google search from the outside,” Pichai said, and if Google rivals could do that, he added, it would be a death knell for the world’s fifth largest company by market cap (worth just under $2 trillion). “It’s not clear to me how we would have any value to our IP” if the DOJ’s plan is adopted, he said.
• Up the Amazon without a paddle: It didn’t take more than a couple of hours before Donald Trump yanked Amazon chief Jeff Bezos’s leash. Early Tuesday, media reports circulated that Amazon’s Haul shopping site planned to post the additional cost of tariffs on each item, much the way the site calculates sales tax by state. White House spokewoman Karoline Leavitt called the move “a hostile and political act by Amazon.” Within minutes Trump was on the phone to the man he once called Jeff Bozo, and the game was over. In a statement, Haul said the idea “was never approved and is not going to happen.” Then Trump publicly gave Bezos a pat on the head. “Jeff Bezos was very nice. He was terrific,” Trump told reporters on Tuesday. “He solved the problem very quickly. Good guy.”

I wonder if Amazon will also explain to the American public why its profit margin must increase every single year and how much Jeff Bezos's $500 million wedding will cost each customer.

They are playing a dangerous political game. pic.twitter.com/OOEtil9aJL

— Charles V Payne (@cvpayne) April 29, 2025

• Turnaround takes time: Starbucks’ same-store sales fell in the U.S. and international stores as new CEO Brian Niccol conceded that his turnaround plan was taking time to deliver. A new algorithm on sequencing orders is speeding up delivery of coffee orders by two minutes, the company said, and it’s restaffing shops with more baristas to meet demand. “I’ve led other turnarounds and everything I’ve seen tells me we’re on the right track,” Nicoll said on an investor call, even as shares slid 7% overnight after the earnings report.
• Downsizing UPS: United Parcel Service is firing 20,000 workers and closing 73 buildings as it cuts ties with Amazon. In January UPS said the margins on its last-mile delivery for Amazon packages were too thin to be worth the effort. Last year UPS cut 12,000 jobs, mostly managers, and shut 11 buildings. Some 330,000 UPS employees are members of the Teamsters Union, whose leader, Sean O’Brien, said the union contract requires creating 30,000 union jobs. “UPS will be in for a hell of a fight” if it tries to eliminate Teamsters jobs, he said.
• Coke on ICE: Coca-Cola execs blame a fake viral video for falling soft-drink sales in Mexico, triggering a 3% drop in North American sales, but the company conceded an 8% rise in prices could also have contributed to the sales issues. Net revenue dropped 2% globally, but the company’s operating profit margin rose to 32.9% from 18.9% a year earlier.
• Say goodbye to that Spirit in the sky: Spirit Aerosystems (not the yellow airline) has a friend in Airbus. The airplane fuselage and parts maker spun off from Boeing decades ago, and was on track to be reacquired this year for $4.7 billion, selling off the units that make parts for Boeing rival Airbus. But in a script-flipping deal, Spirit will now pay Airbus to take over the lines in more than half a dozen of its factories around the world. In total, Airbus says it will receive $439 million from Spirit and in exchange extend a $200 million credit line to the facilities.
• Sue blue: American Airlines is mad at Jet Blue, and they’ve got the lawyers to prove it. In a pair of lawsuits filed this week, American said it’s suing for breakup fees after talks on a new partnership ended, and it’s also filed suit over the Northeast Alliance, a 2020 relationship between the two that ended when a court found it was suppressing competition.
• Meta’s cooking: Facebook parent Meta said it’s coping well with the transition to a more AI-based online world. Q1 revenue was up 16% to $42.31 billion, beating Bloomberg’s consensus analyst estimate of $41.38 billion, while profits rose 35% to $16.64 billion. Meta’s stock rose more than 5% in after-hours trading shortly after the results. The company said it’s boosting its investment in AI hardware from $64 billion to $72 billion for 2025. Shares are down 6.6% since Trump took office.
• Slated for Indiana: Slate, the Jeff Bezos–funded EV startup promising a two-seater pickup or SUV for under $25,000, will open in a former printing plant in Warsaw, Indiana. It expects to make its first deliveries by the end of 2026.

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Your Favorite Subject: Tariffs!

The Trump Tariff Turmoil has gotten so unpredictable that companies including General Motors, JetBlue, Volvo, Delta Airlines, and UPS say they have no idea how their businesses will do over the next three months, let alone the next year, and they’ve abandoned the Wall Street tradition of issuing guidance to investors and analysts.

Call it throwing in the towel, or more accurately the PowerPoint. Usually, CFOs, economists, and a squad of spreadsheet wizards spend months plotting the income and sales they expect for the next quarter or year—they count sales that are in the pipeline and deals that are already closed, and the cost of parts and labor. They compile complex forecasts of Christmas spending, which they plug into the evolving size and weight of Christmas packages (in UPS’s case) or the number of people who’ll fly home for the holidays (in Delta’s case).

But the uncertainty over Trump’s on-again, off-again tariffs has clouded American businesses’ crystal balls. U.S. companies are being forced to throw away the operational maps they’ve refined over years, making it impossible to deliver an accurate earnings forecast.

“The world hasn’t been faced with such enormous potential impacts to trade in more than 100 years,” UPS chief executive Carol Tomé told analysts and investors on an earnings call last week. “The only thing we’re certain of is we don’t know which, if any, of our scenarios will play out.”

Investors and analysts—and the companies themselves—need to be able to forecast sales and earnings, because without these numbers, the markets become a roiling sea of uncertainty.

A Harris Poll released this week showed 84% of senior business leaders were concerned by the current political and legal environment’s impact on their business, with both conservative and liberal business leaders sweating bricks. And 45% of business leaders said Trump’s executive orders and policies have “negatively affected” their business’s ability to compete.

Trumplandia

• No dolls for Christmas: Donald Trump shrugged off concerns that there may be a toy shortage at Christmas after the chiefs of Walmart and Target warned him last month that the 145% tariffs on China mean store shelves will be empty by mid-May. (Christmas toy orders need to be made now in order to be filled in time to arrive at U.S. retailers for the holiday shopping season. Taking questions after a cabinet meeting on Wednesday, Trump said: “Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.” No word from the North Poll on whether elves will be pulling double shifts to make up for the lost toys.

Trump on China: "They made a trillion dollars with Biden selling us stuff. Much of it we don't need. Somebody said, 'oh, the shelves are gonna be open.' Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more." pic.twitter.com/6gVbGQ6oJ2

— Aaron Rupar (@atrupar) April 30, 2025

• The Don backs down: Remember Donald Trump’s demand that Ukraine hand over its rare earth minerals in exchange for U.S. military aid in evicting Russia’s invading army? Well, the deal was signed, and it sure looks like Ukraine comes out a winner. Under the terms released to the media, the profits from Ukraine’s mineral sales will be put into the United States–Ukraine Reconstruction Investment Fund, managed jointly by Ukraine and the U.S. The two will decide on how to invest the profits in minerals, oil, and gas production. The U.S. may add money to the fund, said Ukraine’s deputy prime minister, Yulia Svyrydenko, adding that Ukraine retains full ownership of the resources on its territory. Most notably, despite all of the Don’s fulminating over Ukraine having to pay back Uncle Sam for the missiles and tanks it’s received, the agreement has no provision for Ukraine to owe the U.S. anything.
• Of CHIPS and SHIPS: Among his first moves in taking office, Trump slashed what he could from Joe Biden’s CHIPS Act, a set of government loans and subsidies aimed at reshoring computer chip manufacturing to the U.S., a particularly important move in light of China’s repeated threats to invade Taiwan, where many of the world’s key chips are made. Trump lashed out at the corporate welfare plan. But now the GOP-led Congress is reintroducing a Biden-era bill to have the government invest in (and subsidize) U.S. shipyards. The Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act (SHIPS) would offer tax breaks and create a government trust fund to invest in shipbuilding. Sound familiar? But ships may not be as easy to build as chips. The goal is to add 250 U.S.-built freight ships over the next 10 years. China, meanwhile, had an order book last year of 3,419 commercial ships.
• Dry docks: Speaking of ships, the TTT is shutting down trans-Pacific container ship traffic. Bookings for ships to take Asian-made goods to the U.S. are down at least a third for the world’s five largest container ship operators, and the Port of Los Angeles expects container arrivals to drop 30.4% this week, after 17 sailings were canceled for May, the Wall Street Journal reported. “The Chinese economy has taken the first hit” from Trump’s 145% tariff on Chinese goods, Deutsche Bank’s chief China economist wrote in a report this week. “The shock to the U.S. economy will be delayed, as those goods will not arrive in U.S. ports until a few weeks later, and importers can run on inventories for one to two months.”

Elon’s World

Is Elon Musk getting the boot? Tesla’s board is hunting for a new CEO, even after Musk promsied to step back from chainsawing the federal bureaucracy and spend more time with Tesla. About a month ago, as Tesla’s stock was sinking, the board got serious about looking for a successor, according to The Wall Street Journal, and has now hired an executive search form to find a new CEO. Tesla’s board denied the report in a post on, of course, X.

At a Cabinet meeting on Wednesday, Trump thanked Musk for his work. “You know you’re invited to stay as long as you want,” Trump said. “I guess he wants to get back home to his cars.” Tesla’s profits plunged 71% in the first quarter, and its share price is down 33% since peaking just days before Trump’s inauguration. Musk owns about 13% of Tesla, and last year a Delaware judge blocked the company from giving Musk a multi-year pay package worth $50 billion, more or less.

Earlier today, there was a media report erroneously claiming that the Tesla Board had contacted recruitment firms to initiate a CEO search at the company.

This is absolutely false (and this was communicated to the media before the report was published).

The CEO of Tesla is…

— Tesla (@Tesla) May 1, 2025Honey, I shrunk the economy!

For the first time since the end of the Covid pandemic, the U.S. economy experienced a full quarter of decline in economic output, the first sign of an impending recession. Gross Domestic Product fell at an annualized rate of 0.3% in Q1 of 2025. What growth there was was largely due to a massive boost in imports to get ahead of tariffs, with imports up 41% over a year earlier, the steepest increase since 1972.

It’s not good news, said Ernst & Young chief economist Greg Daco: “This artificial front-loading of demand sets the stage for a sharper demand cliff in Q2—a far more troubling phase of the ongoing economic slowdown.”

Americans from CEOs to shoppers are saying they didn’t sign up for tariff-led inflation and DOGE-led unemployment. But Trump told ABC News interviewer Terry Moran on Monday that the people are getting what they voted for. “Well, they did sign up for it, actually, and this is what I campaigned on,” Trump said.

“President Trump’s tariffs are holding growth hostage,” wrote The Wall Street Journal’s notoriously conservative editorial board. “The best response to the warning from the first-quarter GDP decline would be for Mr. Trump to call the whole tariff thing off.” Net exports, the difference between what the U.S. imports and exports, subtracted nearly 5 percentage points from headline GDP. That was the biggest quarterly drag from net exports on record dating back to 1947.

The news sent the stock market down, but Trump had a ready answer for that: “This is Biden’s Stock Market, not Trump’s,” Trump wrote Wednesday on Truth Social. “I didn’t take over until January 20th.” That’s a far cry from Trump’s Truth Social post last fall when he said, “This is the Trump stock market because my polls against Biden are so good that investors are projecting that I will win.”

None of this is good for companies or the economy, as consumers are spending less, even on basics. “Uncertainty creates a pensive and anxious consumer,” Colgate-Palmolive CEO Noel Wallace said last week, when the company lowered its earnings estimate. “You see consumers destock their pantries and not necessarily buy that extra toothpaste tube or that extra body wash.”

The turmoil could easily drive the economy onto the rocks and provoke a massive recession, which is generally defined as two consecutive quarters of negative growth. For now, it’s left the Fed, whose dual mandate is to keep inflation down and employment up, in a bind: Tariff-induced shortages will drive up prices, even as employment drops because the cost of producing goods (and everything associated with that) is rising. Last month Fed chair Jerome Powell warned that would create a “challenging scenario” for the bank, because raising interest rates to address inflation could worsen unemployment, and vice versa.

“If the administration can’t find an off-ramp on the tariffs soon…then I think we’re going to see a lot more negative GDP numbers dead ahead, and ultimately job losses,” said Mark Zandi, chief economist at Moody’s.