Before the bell: Taco Trade

Nvidia impresses, Musk cuts ties with US government, and the Taco trade is back

Nvidia surprises with stronger-than-expected results, Elon Musk announces he will stop working with the US government, and behind the scenes, the “Taco trade” is gaining attention in financial markets.

Have you heard of the Taco trade? The acronym is making the rounds among market strategists and stands for “Trump Always Chickens Out.” It refers to US trade policy, where analysts have grown less concerned about tariff threats from Washington — because Trump rarely follows through. Adding weight to that view, the US Court of International Trade declared last night that the global tariffs Trump introduced on April 2 were unlawful. Although the government plans to appeal, the S&P 500 has already risen 4% since Trump announced the tariffs.

That said, the tariffs are still hurting the economy. PC maker HP is heading for a red opening today, as the trade war appears to be putting pressure on earnings. For the next quarter, HP expects earnings per share between 0.68 and 0.80 dollar, while analysts had forecast 0.90 dollar. Meanwhile, Salesforce raised its revenue guidance — as a software firm, it’s not feeling much impact from the trade war. Today is Ascension Day, and although markets are open, corporate news in Europe tends to be limited on holidays.

Elon Musk announced that he will stop working with the US government so he can fully focus on Tesla and his other ventures. Later today, Foot Locker and Best Buy will report earnings, though the spotlight this evening will be on Dell, Costco, and Marvell. Nvidia is likely to open significantly higher after releasing stellar quarterly results, despite ongoing export restrictions.

Trump can’t stop Nvidia

“Let us make chips for China. If the US government won’t allow that, global leadership in AI is not guaranteed.” It’s rare for a CEO to use the earnings press conference to send a direct message to the government — but Nvidia CEO Jensen Huang is one of the few who can, and people listen. After last night’s strong results, Nvidia is likely to reclaim the title of most valuable listed company in the US.

Revenue for the first quarter surged 69% to 44.1 billion dollar — 800 million dollar above expectations. Earnings per share came in at 0.96 dollar, beating forecasts by 3 cents. For now, the Chinese headwinds seem to leave Nvidia unfazed, though Huang did caution that China could make life harder for American firms — including his own. Still, based on these results, a sharp increase in Nvidia’s share price looks likely.

AI is starting to pay off

Can companies actually make money with AI? Despite the billions invested, most firms have yet to prove it’s worth it. One exception might be Salesforce, which is beginning to see real revenue from its new AI division. The company has launched Agentforce, a platform where businesses like Microsoft can build AI agents that perform tasks for customers — without human intervention. Think of booking flights or filtering your inbox.

For the first time, Salesforce’s AI division has surpassed the 1 billion dollar revenue mark, prompting the company to raise its full-year revenue forecast. The company now expects between 41 and 41.3 billion dollar in revenue for 2025, up from its earlier range of 40.5 to 40.9 billion dollar. A strong start to the year for Salesforce — and further proof that AI businesses are relatively immune to the trade war.

Did you know…

Nvidia CEO Jensen Huang will be visiting Belgium next week? He’s currently on a European tour that includes stops in France, Germany, Belgium, and the United Kingdom.

This article was translated from Dutch and was originally published on Spaarvarkens.be.