Tariffs, DOGE and Nvidia: This Month In Business and Finance

If there was one theme that persevered across all financial services sectors in February, it was cutting back.

Cutting back on free trade, cutting back on federal spending, cutting back on long-standing alliances and traditions, cutting back on capital expenditures. Investors in February were forced to reckon with what the United States and the rest of the world might look like in a cost-slashing, burn-to-the-ground-and-rebuild kind of environment - both government and private.

What resulted for the month was a collective shift in investor sentiment decidedly towards risk-off: In stark contrast to the pro-business, anti-regulation optimism that preceded U.S. President Donald Trump’s reclaiming of the Oval Office, sentiment decidedly shifted in the other direction amid uncertainty over what and how policy might impact the economy.

Indeed, the possibility that what looked like 1995 on the cusp of repeating itself, in a good way, decidedly shifted to what is starting to look a lot more like 1975, in a not-so-good way, i.e. Stagflation. 

In a post on Truth Social, Trump announced the proposed tariffs of 25% on Mexico and Canada will take effect on March 4 after the one-month moratorium ends. Trump claimed that the two countries had yet to curb the flow of drugs over the border by enough. 

Illicit drugs “are still pouring into our Country from Mexico and Canada at very high and unacceptable levels,” despite pledges from both U.S. neighbors to boost their efforts to police their borders, Trump wrote. 

“We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” Trump said, adding that China, which already faces 10% tariffs from the U.S., would face an additional 10% levy.

Of all the headlines in February, which ones were the most influential in business, financial and fintech news? Here are our three top picks for the month.

Trump, Tariffs, and Trumping Trump

U.S. President Donald Trump floated a US$5-million “gold card” visa for wealthy foreigners, threatened to impose 25% tariffs on EU goods, told Ukraine to “forget about” joining NATO, warned that about 1 million federal workers are at risk of losing their jobs if they don’t comply with Tesla CEO and Department of Government Efficiency (DOGE) maestro Elon Musk’s demands, and personally vowed to investigate whether gold has been stolen from Fort Knox.

Trump also said tariffs on imports from Canada and Mexico would be pushed back by about a month, but a White House official said the March 4 plan remains on track.

And that was all in the span of 24 hours.

No matter where your politics lie, it has become increasingly difficult to read the proverbial tea leaves and get a pulse on where the economic climate is at. 

What all but vanished in February was the long-standing belief that a Republican majority in control of the White House and Senate is de facto good for the economy. On the contrary, the canary in the coal mine could be Tesla itself, specifically its stock performance.

While Musk has continued to cull the U.S. government workforce in similar fashion as he did at Twitter, Tesla stock is down 28% year to date — and has nearly given up all its gains since President Trump’s election win on Nov. 5 (the stock closed at $251.44 on Election Day). The stock hit a closing high of $479.86 on Dec. 17 and has slid ever since, tumbling below the $1 trillion market cap level as well.

The stock has fallen dramatically for other reasons, too: lackluster fourth-quarter earnings and deliveries, a decline in full-year deliveries for the first time, a probe into one of Tesla’s autonomous features by NHTSA, discounts on the polarizing Cybertruck, and most recently, a tumble in European sales.

The question on investors’ minds: Is Tesla’s more recent financial performance a precursor to the U.S. economy and stock market’s performance?

Bitcoin Stumbles Again

Just like the markets, bitcoin and crypto more generally did an about-face in February, driven by expectations that the perceived good times ahead for crypto might have been too much, too soon, coupled with some not-so-flattering headlines involving hacking and fraud.

Cryptocurrency news provider CoinDesk, in its February 27 daily newsletter, characterized the late-month BTC “bloodbath” this way: “Do you ‘buy when there is blood in the streets’? Or perhaps ‘don't catch a falling knife.’?

Indeed, in the final week of February, the largest cryptocurrency posted its steepest three-day decline since the collapse of FTX in 2022, leaving bitcoin 25% below its January all-time high.

Of course, the largest hack in crypto history certainly played a role. The Bybit cryptocurrency exchange lost an astonishing $1.5 billion in February in a cyber-heist attributed by the FBI to North Korean hackers, underscoring the vulnerabilities of cryptocurrency exchanges and highlighting the prowess of North Korea in cyber operations.

And boy, did it ever. In what was described as a highly sophisticated, coordinated operation, hackers infiltrated Bybit’s digital defenses, executing the virtual equivalent of a bank heist that breached layers of security. The breach not only led to one of the biggest digital thefts in history, it exposed the vulnerability of cryptocurrency exchanges more generally.

Of course, bitcoin and crypto bulls are never far away, with many noting that even with fraud, hacking, and uncertainty, the latest rout isn’t as bad as previous bull-market corrections. Still, the bears still have their argument that rears its head every time there’s a downturn: How exactly does one put a value on a digital asset, anyway?

AI Ain't Going Away

It was one of the most anticipated events of the month, if not earnings season: The fiscal fourth-quarter results from the darling of all things artificial-intelligence and chips, Nvidia, which  not only topped fourth quarter revenue and earnings expectations but also pointed to additional upside ahead thanks to cloud service hyperscalers. 

Nvidia said it expected about $43 billion in first-quarter revenue, plus or minus 2%, versus $41.78 billion expected per LSEG estimates. The first-quarter forecast implies year-to-year growth of about 65% from a year earlier, a slowdown from 262% annual growth in the same period a year prior.

Net income during the quarter rose to $22.09 billion, or 89 cents per diluted share, versus $12.29 billion, or 49 cents per share, in the year-ago period.

Nvidia reported a 73% gross margin in the quarter, which was down three points on an annual basis. The company said the decline in gross margin was due to newer data center products that were more complicated and expensive.

Revenue continues to surge at Nvidia as the company rides the AI boom with its data center graphics processing units, or GPUs, which comprise the vast majority of the market for AI accelerators. Nvidia’s revenue in the quarter rose 78% from $35.1 billion, and full fiscal-year revenue for Nvidia rose 114% to $130.5 billion.

Speaking to Yahoo Finance’s Julie Hyman and Josh Lipton following the earnings results, WestEnd Capital Management senior equity analyst Ali Mogharabi said he thinks the broader buildout of AI and AI-related infrastructure is “still far from the peak.”

One big takeaway for Mogharabi: an increase in demand for customized chips, which will mean more upside for Nvidia and other peripheral chip makers. 

“I do think that demand for more customized chips could actually increase, but you still need all of that computing power for a few reasons, right?" he said, adding that… "as inference continues to improve, the application of all of this AI technology widens.”