Google parent Alphabet shines brightly in a volatile week for US markets

The US markets have come full circle thanks to several U-turns from the Trump administration on tariffs and its attacks on US Fed chair Jerome Powell.

Over the past three trading sessions, the tech-heavy Nasdaq index has soared more than 8%, the S&P 500 by a little more than 6% and the Dow Jones Industrial Average Index by more than 5%.

These gains are in stark contrast to Easter Monday when the DJIA and S&P 500 fell more than 2%, and the US dollar hit a three-year low.

Trump had criticised Powell for not lowering interest rates and in a separate incident called for Powell to be fired rather publicly on social media.

Fast-forward 24 hours Trump had backed off from his threat to fire Powell, sparking a ‘relief rally’ which lasted the rest of the week.

In other news the US jobs market held steady - jobless claims increased 6,000 to 222,000 despite uncertainty around the US trade tariffs policy.

The US has made progress with India and South Korea over potential tariff deals but things remain strained with China.

US Treasury secretary Scott Bessent is reported to have said in the media that a trade war is ‘not sustainable’ and ‘there would have to be a de-escalation by both sides.’

Alphabet

Talk that president Donald Trump’s tariffs policy roulette might plunge the US into recession has weighed heavily on the market’s mind in recent weeks, and taken a huge bite out of Alphabet’s valuation.

Advertising budgets normally shrink pretty quickly when the macro backcloth turns ugly yet that simply isn’t happening, so far.

Alphabet’s shares rallied more than 5% in aftermarket trade, after the company clocked much stronger than expected earnings for the first quarter and announced a $70 billion buyback.

Search advertising remains robust with revenue rising 10%, beating forecasts, revenue from YouTube, now two decades old, clocking similarly firm.

Its Google Cloud business might be seen as a slight blemish, coming in just shy of consensus at 28% growth versus the 29% expected, yet the business posted significant margin improvements, which should ease concerns.

Reaffirming ambitious AI development plans also offers investors greater confidence that AI-driven demand for chips and data centres will persist. The company is among Wall Street’s biggest spenders on AI.

Still, Alphabet did flag some potential headwinds from macroeconomic uncertainty, providing little forward guidance, and there are still some geopolitical clouds on the horizon, particularly around potential tariffs, and the impact of Chinese advertisers, such as Shein and Temu, reducing investment.

But so far, Alphabet looks to be weathering the storm, setting a strong precedent for other major Wall Street tech stocks, especially those with heavy exposure to AI.

Tempus AI

Shares in genetics testing firm Tempus AI surged 16% on 23 April after it announced a multi-year strategic collaboration with AstraZeneca and Pathos AI to develop a cancer model to gather biological and clinical insights.

The agreement includes $200 million in data licensing and model development fees to Tempus, leveraging its huge cancer database and artificial intelligence capabilities.

Tempus founder and CEO Erik Lefkofsky said: ‘Generative AI and the emergence of large multimodal models is the final catalyst needed to usher in precision medicine in oncology at scale.’

The collaboration with AstraZeneca expands on an existing strategic partnership first announced in 2001. Tempus floated on Nasdaq in June 2024 to position itself as a key player in the application of AI to healthcare and personalised treatments.

Scottish Mortgage was an early backer of Tempus having first invested in 2019 and today is its third largest shareholder.

3M

3M shares were marked up 5% to $140.3 after the industrial conglomerate’s first-quarter earnings topped Wall Street estimates with a boost from cost-cutting, confirming that new CEO Bill Brown’s turnaround strategy is working.

There was also relief as the Scotch tape-to-Post-it notes maker maintained full-year guidance in the face of Donald Trump’s tariffs. First quarter earnings were up 10% to a forecast-busting $1.88 per share, while adjusted operating margins rose 220 basis points year-on-year to 23.5%, leaving 3M on track to achieve its 25% return on sales target for 2025.

The Minnesota-based firm, which returned $1.7 billion to shareholders via dividends and buybacks in Q1, reiterated full-year 2025 guidance for earnings in the $7.60 to $7.90 range with tariff-related risks factored into the outlook.

‘We had strong results in the first quarter with positive organic sales growth, margins ahead of expectations and double-digit EPS growth,’ said Brown. ‘In this dynamic environment we remain focused on improving the fundamentals in the business, building a new performance culture and advancing our strategic priorities while leveraging our extensive global network and significant US footprint.’