The Rundown - Nvidia Rallies on Earnings Beat, E.l.f Beauty Acquires Hailey Bieber Brand for $1B

Episode Date: May 29, 2025

Stock market update for May 29, 2025. This video is for informational purposes only and reflects the views of the host and guest, not Public Holdings or its subsidiaries. Mentions of assets are not recommendations. Investing involves risk, including loss. Past performance does not guarantee future results. For full disclosures, visit ⁠⁠⁠⁠Public.com/disclosures⁠⁠⁠⁠.

Public.com presents the rundown. Your daily market update in under 10 minutes. My name is Zadadmani, and today is Thursday, May 29th. In today's episode, we recap a wild 24 hours in the markets, Envidia earnings, courts blocking Trump's tariffs, and the emergence of the taco trade. We'll break it all down. Then stick around to the end of the show to find out how much Haley Bieber skincare company

just sold for after only being found, three years ago. We got a great show for you today. Let's go. Stocks were in the red yesterday with both the S&P 500 and NASDAQ losing around half a percentage point. Investors were gearing up for Nvidia's earnings report, but surprisingly, the most talked about trade yesterday wasn't Nvidia. It was the taco trade. Yes, Taco. It's an acronym making its way around Wall Street. It stands for Trump always chickens out. This term was coined by a writer for the Financial Times. And it refers to the pattern where President Trump announces massive tariffs, which causes the markets to freak out. So then Trump backtracks a few days later.

You know, he chickens out. And when he backtracks, the market shoot back up again. And we've kind of seen this play out over the last couple months. Trump has paused the reciprocal tariffs that he announced back on Liberation Day. He's also paused tariffs on China. And we saw this play out again over the past week when on Friday morning Trump threatened 50% tariffs on the EU. The markets freaked out, and then by Sunday, Trump put a pause on those tariffs as well. So the taco trade is essentially buying the dip every time Trump announces tariffs because the odds are he's eventually going to fold. That's played out so far. Well, this trade might be ruined now because a reporter asked President Trump about this at a press conference yesterday.

And let's just say he wasn't very thrilled about being called a taco. Oh, isn't that night chicken out? I've never heard that. You mean because I reduced China from from 145% that I set down to 100 and then down to another number. It's called negotiation. We were doing no business because of the tariff because it was so high. But I knew that. But don't ever say what you said. That's a nasty question.

Go ahead. Now, I don't know about you guys, but after hearing that from Trump, I started getting worried that he might just double down on tariffs just to prove the taco traders wrong. Well, yesterday, we found out that Trump might not have the tariff button to push anymore. A federal trade court yesterday ruled that Trump didn't have the legal authority to impose tariffs under the Emergency Powers Act, which includes the reciprocal tariffs that includes the fentanyl tariffs and the 10% baseline tariffs.

All those tariffs are now on hold, effective immediately. So this ruling is going to have a huge economic impact, and it's going to prevent Trump from pressing the tariff button again. But look, this legal fight's probably not over. The Trump administration says they plan to appeal this decision. So I have a feeling this is probably going to end up in the Supreme Court. for now, the markets are loving this news. Stocks are flying across the board in pre-market trading.

So yeah, it's been a pretty wild 24 hours, and I haven't even mentioned Nvidia yet. They reported earnings yesterday after the market close. So let's finally talk about them. The most hyped earnings report of the season dropped last night, and Nvidia did not disappoint. The AI chip giant beat expectations across the board. The revenues in Q1 jumped 69% to $44 billion, $39 billion of that coming from their Data Center division, which is their AI business, and then another $3.8 billion came from their gaming division, which crushed analyst forecasts. Remember, Nvidia still sells a ton of gaming

graphics cards. Overall, the company's profits for Q1 came in at nearly $20 billion. That's up 31% from a year ago. So yeah, Nvidia is still crushing it, and this report pushed their stock price up over 5% in after-hours trading. Don't look now, but the stock is getting pretty close to all the time highs again. Crazy to think the stock was trading under $100 just two months ago. Now, this week, I said I was curious to hear what Nvidia would say about China and the Trump administration's new export restrictions. And yeah, they're not thrilled about it. Because of these new export restrictions, Nvidia isn't allowed to sell any AI chips to China right now. And because of that, they had to take a $2.5 billion revenue hit in Q1 from their unsold H20 chips. And what's ironic

about that is that the H20 chips were specifically designed by Nvidia for the Chinese market to comply with the previous export restrictions from the Biden administration. But now they're not a lot to sell those either. And Nvidia expects to take an $8 billion revenue hit in the current quarter because of these new export restrictions. Now, CEO Jensen Huang was optimistic on the earnings call. He told investors that the global AI market is still in exponential growth mode. And Nvidia projects to make $45 billion in revenue for Q2, which is what Wall Street was expecting. This is even with the China band baked in. It probably helps that Jensen was in the Middle East a couple weeks ago cutting deals to sell billions of dollars in AI chips over there. So that

might help soften the blow from losing access to China. But make no mistake though, Jensen is not happy about the China chip ban. On the earnings call, he made the case that these export restrictions aren't going to slow down China's AI progress. In fact, it might end up helping Chinese chipmakers like Huawei because it's going to shield them from competition from U.S. competitors. I think Jensen was trying to send a not-so-s subtle message to the Trump administration. But I'm not sure if that message is actually getting through because the Trump team seems to be doubling down on even more export restrictions to China, which brings us to our next story.

The Trump administration announced a new round of export restrictions to China, this time targeting the software used to design chips and not just the chips themselves. The Commerce Department told U.S. companies like cadence and synopsis, which make the software use to design semiconductors, to stop selling their software to Chinese customers.

This type of software is known as EDA or electronic design automation, and without it, holding cutting edge chips gets a lot harder. So obviously the stocks of those companies took a dive after this report. Cadence, ticker symbol, CNDDS, and synopsis, ticker symbol S&PS,

dropped around 10% on Wednesday. So it's becoming harder for AI companies across the board to do business in China. In fact, NVIDIA got called out by Senators Elizabeth Warren and Jim Banks for opening up facilities in Shanghai. According to our report from the Wall Street Journal, the senators sent a letter to NVIDIA

stated that Nvidia's planned facilities raised national and economic security concerns that warranted a review. Now, Nvidia says all they're doing is leasing extra office space for existing employees and that there's no advanced chip designs being sent over to China. But I don't know. The lawmakers don't seem to be buying it. Now, there are reports that Nvidia is cooking up a chip for the Chinese market that complies with the latest round of export restrictions.

We'll have to see. But I think it's safe to say that Nvidia is going to continue being in the crosshairs of all the political drama. Let's talk about some stocks making moves today. JetBlue and United Airlines shares are up this morning after the two airlines announced a new partnership. The airlines are teaming up to sell each other's flights on their website, and they're also connecting the rewards program, which means that you'll be able to use your miles on United to book flights on JetBlue and vice versa. So it seems like a win-win partnership to me and the market seems to like it as well. Now, as part of this deal, United will start flying in and out of JFK, which they haven't done in like 10 years.

And this will also give JetBlue more flights through Newark. I'm not sure why they'd still want to do that after all the reports coming out of Newark. That reminds me, I'm actually flying into New York City next week, and I think I'm going through Newark. So I'll give you guys a boots on the ground report of how Newark Airport is doing. Now, on the flip side, shares of Best Buy are down this morning after the tech retailer missed revenue estimates and cut its full year outlook. The company blamed weaker sales, but they're also.

blaming tariffs as a big concern. Management said the new outlook takes current tariffs into account, but they'll adjust the scenario if trade environments change, which it kind of did in a big way last night because of this new court ruling putting a pause on tariffs for now. Best Buy gets 55% of its products from China and another 20% from Mexico. So yeah, they're kind of caught right in the middle of the tariff war. Investors weren't so thrilled to the earnings report and shares of Best Buy are down more than 2% this morning in reaction to these earnings. Let's wrap the show with Fun fact. Haley Bieber just pulled off a billion dollar skincare deal.

Elf Beauty is acquiring her skincare brand Road for a billion dollars. And here's the crazy part. Road only launched three years ago back in 2022. The company was already doing more than $200 million in annual revenue. So Elf thought that it was worth scooping up. By the way, this will be Elf Beauty's largest acquisition ever. And they announced this news alongside their latest earnings report, which beat expectations on both top and bottom line.

Now, the company did pause guidance because of tariffs, but investors weren't too concerned about that. They were clearly loving the glow up and the announcement of this acquisition, and Elf's shares are up nearly 30% today at the time of this recording. Also, bonus fun fact, Selena Gomez has a makeup company called Rare Beauty,

and it's estimated to be worth more than $2 billion, according to Bloomberg. So, yeah, Justin Bieber, he has an eye for entrepreneurs, it seems like. Well, all right, guys, that's the rundown for today. It has been an absolutely wild 24 hours, and we still got one more day left this week. We'll be back here tomorrow, recapping all the drama.

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