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PRESIDENT Donald Trump’s move to extract a 15% sales tax from Nvidia Corp. on certain semiconductors sold in China did nothing to damp investor enthusiasm for the world’s most valuable company.

A look at balance-sheet math goes a long way to explaining why. In the first quarter, Nvidia said it sold $5.5 billion in products to China, roughly 13% of its total. The chips exposed to the Trump tax accounted for about 80% of that, or just under $5 billion. 

That means the Santa Clara, California-based firm could send some $700 million per quarter to the Treasury — hardly chump change. But for a company that churns out $20 billion in profit a quarter and increases sales by a similar amount – a rate of growth it’s sustained throughout the AI boom — paying the tax barely registers.

“I don’t think it’s that big of an issue,” said Larry Tentarelli, founder of Blue Chip Daily. “If it was their overall revenue base, it would be a big problem. But because China is not the biggest proportion of their revenues, it’s a speed bump.”

Nvidia shares slipped Monday after the tax was disclosed, then rallied to a fresh record Tuesday in a broad market advance. The chipmaker’s shares have doubled since early April, pushing its market value past $4.4 trillion. Similarly, AMD, which agreed to the same tax, closed at the highest in more than a year on Wednesday, bringing year-to-date gains to 53%.

Nvidia reports second quarter earnings on Aug. 27. Analysts expect it will report earnings growth of 44% on a 53% surge in revenue to $45.9 billion. 

That’s not to say the clouds have completely lifted in China. Bloomberg News reported this week that Beijing has encouraged local firms to avoid using Nvidia’s chips  — a move that could limit sales.

And worries abound that chipmakers will increasingly become ensnared in federal trade policy or that China could make a more formal recommendation to ban certain US chips altogether. 

“It is a hard game to know how this will play out. I would almost consider the stocks absent this news,” said Michael Matousek, head trader at U.S. Global Investors Inc. “If you already liked them, there’s potential for upside from China, but there are risks this could change again.”

None of that, though, seems to register among investors betting that red-hot demand for AI infrastructure will continue to burn. The trend has lifted shares of Nvidia from their April lows alongside Magnificent Seven peers deemed AI winners, including Meta Platforms Inc. and Microsoft Corp.

The tax news is “mostly empty calories,” Citigroup’s Christopher Danely wrote in a note this week on AMD. “We view this as not material given the low margins of these products, and these AI GPUs could be banned in China again.”

At Bernstein, analyst Stacy Rasgon worries about the precedent the Trump tax sets. The arrangement “might raise some money, but doesn’t seem to address any strategic issues beyond a grab for dollars,” he wrote in a note published Aug. 11.

Regardless, Nvidia shares will rise or fall on its ability to deliver sales of cutting-edge chips, most notably its Blackwell products. 

“What’s more important is the trajectory of Blackwell and whether or not Blackwell is going to meet or exceed expectations,” said Melissa Otto of Visible Alpha LLC. “That’s what the market has priced in. That’s where we see the biggest uplift in demand and growth. And so that is ultimately what is going to drive the earnings expectations and valuation for the stock.” 

That major question, along with the trade uncertainty and Nvidia’s rally do leave the shares exposed to profit-taking ahead of the Aug. 27 report.

“I’m not going to bet on whether this stays a positive,” said Alvin Nguyen, senior analyst at Forrester. “There have been so many rapid changes, there’s still so much uncertainty, and we need to see stability in trade.” –BLOOMBERG

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Birkenstock Holding Plc reported earnings that were slightly better than expected as the German company benefitted from raising prices on its high-end sandals and clogs and strong demand from retail partners.

Adjusted earnings came in at €218 million ($255 million) before interest, taxes, appreciation and amortization in the fiscal quarter that ended in June, according to a statement Thursday. That exceeded the €213 million average of analyst estimates. 

Sales of €635 million for the quarter were largely in line with estimates, helped by demand particularly in the Americas and the Europe, Middle East and Africa region, the company said. 

Shares in Birkenstock rose as much as 3.4% in premarket trading.

Chief Executive Officer Oliver Reichert wants to capitalize on the brand’s recent momentum by grabbing more market share in the footwear world as others struggle to deal with rising tariffs and supply chain snarls.

Birkenstock, which makes almost all of its products in Germany, has begun to compensate for those challenges by, among other actions, raising prices by a percentage in the mid-single digits, the company said.   

Constant-currency sales grew 16% in the Americas and 13% in Europe, Middle East and Africa, both above the average estimate. The expansion of 24% by that metric in the Asia-Pacific region fell shy of analyst expectations, despite the opening of eight new stores there.

‘Must-Have’ Brand

The company is also seeing robust demand from key retail partners in the US and elsewhere, one factor behind the 18% growth in its business-to-business division in the quarter. That topped estimates, while Birkenstock’s direct-to-consumer sales channels showed slower growth than many expected.

Birkenstock has emerged as one of five “must-have” brands that retailers need to stock to be successful, along with On Holding AG, Brooks and Deckers Outdoor Corp.’s Hoka and Ugg brands, Sam Poser, an analyst at Williams Trading, said in a note earlier this week.

That contrasts with the struggles of rivals including Crocs, whose shares tumbled last week after the brand offered a dismal sales and earnings projection.

In recent years, Birkenstock has benefited from growing demand for its closed-toe sneakers, boots, clogs and slippers, which often command higher price tags than the classic sandals. 

It’s also expanded its offering of cheaper plastic footwear, which is bringing in new customers and convincing long-time fans to pick up extra pairs that are geared toward the beach and humid climates. The company has found ways to lift prices on those products, too, including by offering higher-end versions with, say, larger buckles. 

Birkenstock shares are down about 11% so far this year, which is similar to many of its footwear rivals and trails the performance of the S&P 500 Index. 

Reichert has repeatedly said he wants to be conservative with his financial forecasts, with the company maintaining its full-year outlook. –BLOOMBERG

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HON Hai Precision Industry Co. expects sales of servers to more than double this quarter while its consumer electronics business dwindles, underscoring how it’s relying on the AI boom to offset volatile iPhone sales.

Hon Hai, which assembles Nvidia Corp. servers and Apple Inc. gadgets, posted a better-than-projected 27% rise in net income in the June quarter. It predicted a 170% rise in revenue from servers made for artificial intelligence tasks during the current three-month period. But executives warned the smart consumer electronics business, which faces potential US tariffs, should shrink this year.

Hon Hai is navigating abrupt geopolitical shifts while it tries to diversify its manufacturing footprint. It already cut its full-year revenue guidance in May, citing potential fallout from the US-China trade war. President Donald Trump has since declared plans for a 100% tariff on semiconductor imports, though he’s promised to exempt companies that move production to the US.

“Major cloud service providers are raising their spending, and governments around the world are rolling out sovereign AI projects. This shows overall AI demand still outstrips supplies,” Hon Hai rotating Chief Executive Officer Kathy Yang told analysts on a post-earnings call on Thursday. “Our group is aggressively expanding our capacity to meet the swiftly growing demand.”

On Thursday, the company reported net income of NT$44.36 billion ($1.5 billion) for the period, beating an average analyst projection for NT$36.14 billion. The company, also known as Foxconn, earlier reported a 16% sales increase for the period.

Foxconn is expanding capacity in the US — heeding Trump’s call to avoid tariffs by shifting production to America. It will add more AI server production in Wisconsin and Texas, where the company operates existing campuses, Yang said.

SoftBank Group Corp. is taking ownership of Foxconn’s electric vehicle plant in Ohio, kick-starting the Japanese company’s $500 billion Stargate data center project with OpenAI and Oracle Corp. The Taipei-based company would operate the plant and use the site for its own AI server manufacturing business, Bloomberg News reported.

Apart from tariffs, Foxconn’s appreciating home currency is also disrupting business. The decline in smartphone revenue stems from the Taiwan dollar’s recent gains against the greenback, Hon Hai executives said. 

Every NT$1 rise against the US dollar on a yearly average will reduce Hon Hai’s revenue by about 3%, its executives have estimated. –BLOOMBERG

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SAUDI Arabia’s flag carrier airline is in advanced discussions with SpaceX to install the Starlink internet service, in a move that would expand Elon Musk’s footprint in a highly competitive market for onboard wifi, according to people familiar with the talks. 

Saudia is finalizing a deal to roll out the service across its fleet of more than 140 aircraft, said the people, who asked not to be identified discussing private deliberations. 

Securing partnerships with one of the biggest Middle Eastern carriers would represent a significant milestone for Starlink as it pushes further into the global market for in-flight connectivity and challenges established players like Viasat Inc. A deal with Saudia would give SpaceX a foothold in the Gulf’s biggest economy, at a time when local rival Neo Space Group, owned by Saudi Arabia’s sovereign wealth fund, works on establishing its own satellite-based in-flight service. 

Rossen Dimitrov, the Saudia chief guest experience officer who previously worked at competitor Qatar Airways, wrote on LinkedIn that he recently visited the SpaceX industrial complex in Texas to learn “about the exciting future they are bringing to aviation.” 

Besides Saudi Arabia’s flagship airline, SpaceX is also in advanced talks with Emirates, the Dubai-based carrier that commands the world’s biggest long-haul fleet of Boeing Co. and Airbus SE aircraft, Bloomberg News previously reported. 

The service has also pitched its high-speed internet offering to Bahrain’s national carrier Gulf Air, according to another person familiar with the talks, and Emirates’ sister carrier Flydubai is equally exploring a contract with SpaceX, other people said.

Saudia, Flydubai and SpaceX didn’t immediately reply to requests for comment, while Gulf Air declined to comment on talks with Starlink. The deals are not final and the airlines could decide to partner with other providers, the people cautioned. 

Saudi Arabia has worked to revive its 80-year old legacy carrier, as part of a plan to diversify the desert nation’s economy away from oil and build up its tourism and aviation sectors. Saudia has overhauled its senior management, partnered with sports teams and placed greater focus on the in-flight experience, from signature coffee cups to high-end amenity kits.

Riyadh Air, Saudi Arabia’s startup carrier that’s set to launch by the end of the year, has partnered with Viasat.

SpaceX markets its Starlink service to airlines through a subscription model similar to its consumer offering. Airlines face upfront hardware costs that amount to anywhere between $300,000 and $500,000, depending on the aircraft, in addition to a monthly fee for every seat, according to a document seen by Bloomberg News.

During US President Donald Trump’s visit to Saudi Arabia in May, Musk said the country would authorize the use of Starlink for aviation and maritime purposes. For now, the service isn’t authorized for use in the United Arab Emirates, and a deal with the Emirates or Flydubai would likely require a reversal of that policy. In the region, Qatar, Bahrain and Jordan already allow the use of Starlink.

Qatar Airways was the first carrier in the region to offer the service last year. The No. 2 airline in the Gulf has made Starlink available across the cabin of its Boeing 777 models, and the company has started retrofitting its Airbus A350 jets, with the 787 Dreamliners up next.  –BLOOMBERG

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CK Hutchison Holdings Ltd. ruled out the likelihood of the controversial sale of its global ports to a BlackRock Inc.-backed consortium being completed this year but stayed optimistic about the deal’s prospects after inviting a Chinese investor into the mix. 

A transaction wouldn’t be completed this year even if binding agreements are settled sooner, said CK Hutchison co-managing director Frank Sixt at an analysts briefing following the release of its interim earnings results on Thursday. He pointed out the complexity involved in the deal, which covers 43 of CK Hutchison’s ports including two in the strategic Panama Canal. If completed, the sale could net the conglomerate founded by billionaire Li Ka-shing more than $19 billion in cash. 

“We are in a new stage of our deal and that includes, as we have said, discussions with a major strategic Chinese investor,” Sixt said. “I believe that there is a reasonable chance that those discussions will lead to a deal that is good for all of the parties, ourselves included, and most importantly, that will be capable of being approved by all of the relevant authorities.”

The comments came amid uncertainties over the fate of the geopolitically fraught deal, which has become a proxy for the rivalry between the US and China. While President Donald Trump hailed the sale as a win over the Panama waterway, Beijing has expressed strong displeasure over the sale, seeing it as a betrayal to the nation and kowtowing to American pressure. 

CK Hutchison has already missed a chance to ink a definitive agreement before a window for exclusive talks with the buying consortium expired in late July. 

State-owned China Cosco Shipping Corp. was negotiating a powerful role for itself as a condition to join the buying consortium, which also includes Italian billionaire Gianluigi Aponte’s Terminal Investment Ltd., people familiar with the matter have said.

While the discussions have taken longer than expected, the group doesn’t see it as particularly troublesome because the port operations have been performing well this year, Sixt said. The company reported a 9% increase in revenue at its ports and related services business for the first half of the year, while earnings before interest, taxes, depreciation and amortization rose 10%, mainly due to higher throughput and storage income in regions including mainland China, Asia, the Middle East, Mexico and Europe. –BLOOMBERG

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FIREFIGHTERS worked overnight to contain deadly blazes in Greece and Spain that have forced the evacuation of thousands of residents and tourists.

A wildfire is still burning in an inaccessible part of the Aegean island of Chios, where coastguard vessels carried people to safety from beaches on Wednesday. Crews are working to restore electricity after flames destroyed power poles, triggering a blackout across the island.

The number of fires and the amount of area burned has soared in Europe this summer as four major heat waves baked vegetation into kindling. This week, strong winds have spread flames quickly through dry brush, forests and farmland. Nearly 4,400 square kilometers (1,700 square miles) have burned this year, according to satellite data and European Union assessments.

The European Union this week dispatched firefighting planes and helicopters to help battle blazes in Greece, Spain, Bulgaria, Montenegro and Albania. The EU has been called to assist with 16 wildfire events so far this year, matching the number of activations for the entire May-October fire season in 2024, EU officials said.

Climate change has made heat waves more frequent and intense in Europe, the world’s fastest warming continent. That’s triggering more extreme weather events such as wildfires and violent storms.

Greek firefighters are also working to control blazes near Patras and Xirochori in western Peloponnese, while outbreaks in Zakynthos and near Filippiada in northern Greece have been largely contained. Fanned by strong winds, most of Greece — including Athens and the surrounding Attica region — faces dangerous wildfire conditions on Thursday. 

A large swath of the Mediterranean from North Africa to Spain is threatened as the latest heat wave lingers. Fires have torched French vineyards and burnt mountain villages in Albania. 

Red heat warnings have been issued for Germany, Croatia, Serbia and Cyprus, where inland areas could reach 45C (113F) on Thursday. Over the coming week, conditions will ease with the transition to cooler weather accompanied by thunderstorms in many places.

In Spain, where temperatures will climb to 42C today, more than a dozen roads have been shut and high-speed train service on the Madrid-Galicia line is suspended due to wildfires.  –BLOOMBERG

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ORACLE Corp. is cutting jobs in its closely watched cloud unit, the latest company taking steps to control costs amid heavy spending on AI infrastructure.

Impacted workers were told this week that their roles were eliminated, according to people familiar with the matter. Some of the reductions were related to performance issues, and the unit continues to hire, two of the people said.

More than 150 jobs were cut in the Seattle area, which is traditionally the unit’s hub, according to two people familiar with the figures. Oracle said last year it was moving its headquarters to Nashville, and the company currently has more jobs listed in Tennessee than any other state.

An Oracle spokesperson didn’t respond to multiple requests for comment. The full scope of reductions couldn’t be determined. The overall cuts were first reported by DatacenterDynamics, an industry news publication.

Many tech giants have sought to deal with the surging costs of AI by reducing expenses in other parts of the business. Microsoft Corp. has cut some 15,000 roles this year. Amazon.com Inc. and Meta Platforms Inc. have also axed jobs.

Oracle’s stock is near an all-time high on momentum in its cloud unit. Last month it inked an unprecedented deal with OpenAI for about 4.5 gigawatts of data center power in the US. Still, the company is on the hook for tens of billions of dollars to build out increasingly large server farms to meet demand. Its free cash flow was negative in the fiscal year that ended in May.

In a June filing, Oracle said that it periodically makes changes to its workforce due to strategy changes, reorganizations or performance issues. “These types of restructurings have resulted, and may in the future result, in increased restructuring costs and temporarily reduced productivity while employees adjust to the restructuring.” –BLOOMBERG

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