President Donald Trump’s tariff strategy has governments and companies scrambling to determine what’s next.
This week, the President announced a 90-day pause on implementing the tariffs for every country except China, which now faces tariffs of over 100% now that the negotiations have seemingly turned personal.
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Starving for any good news, markets jumped Wednesday after the pause was announced, but Thursday’s session is off to a rocky start as investors digest the new world economic order.
Despite the reciprocal tariff pause, the Trump administration is still imposing 10% tariffs across the board (minus Canada and Mexico) while it negotiates with countries individually.
Additionally, steel and aluminum imports have a 25% duty, as do most auto imports.
That decision is weighing heavily on markets Thursday, as the major indices sank in morning trading after a historic rally during Wednesday’s session.
Related: Stock Market Today: Stocks slide as markets pause Trump tariff U-turn rally
Most people think of Alphabet as a tech company that sells a relatively small amount of hardware. So, at first blush, it may not seem like 25% tariffs on China would be a big deal for the company, which operates mainly in the digital space.
Google, Alphabet’s bread and butter, isn’t even allowed to operate in China.
But analysts at Oppenheimer are still worried about how advertising will be affected by the trade war.
Alphabet price target lowered by Oppenheimer
Analysts at Oppenheimer lowered Alphabet’s price target to $185 from $225 per share while maintaining its outperform rating on the stock.
The firm now expects the tariffs, excluding China, to be temporary. While most of the effects of this week’s developments will be felt in Q2, the long-term ripples will be felt for much longer.
In this new environment of uncertainty, Oppenheimer analysts believe advertisers will prioritize flexibility, performance, and measurability, TheFly reported.
While this means social media advertising will take a hit, the firm is less pessimistic about Google and Pinterest. But it also sees Snap and especially Meta Platforms, the parent company of Facebook, Instagram and WhatsApp, as exposed to the China tariff fallout.
While Alphabet doesn’t face the most exposure from tariff developments, Oppenheimer isn’t the only analyst firm that has recently questioned its place in the post-tariff world.
Related: White House adviser claps back after Elon Musk takes shot
Alphabet shares were down more than 2% Thursday, caught up in the wider market sell-off.
Alphabet faces pressure on multiple fronts
Last week, analysts at Jefferies lowered Alphabet’s price target from $200 to $235 per share while maintaining its buy rating.
Analyst Brent Thill said, “We may have another ‘mullet’ year in software,” with a first-half chop followed by second-half flow.
The analyst said ongoing uncertainty means “investors are waiting on the sidelines to assess the impact.”
More Tech Stocks:
Analysts revisit Apple stock price targets as Cook courts BeijingVeteran trader takes hard look at Tesla stock price amid slump, controversyAnalysts rework Micron stock price targets after earnings
“We believe AI‘s early, and that will have an impact later in the year, but expectations have been too high in AI for software, and none of these companies are seeing more than 5% of their total revenue related to AI,” he told CNBC recently.
Meanwhile, Melius Research analyst Ben Reitzes wondered whether Google was the next Kodak, the photography giant that declined after failing to adapt to the digital revolution and ultimately went bankrupt in 2012.
“We have focused on ‘the simple’ with Alphabet since our launch in mid-2023 — and that view is predicated on the view that Google is losing the next generation of ‘searchers’ to ChatGPT,” he wrote, according to Morningstar.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
