3 Retail Stocks That Desperately Need a Tariff Break

Whether they invest or not, most Americans are getting weary of tariff talk. Beyond the prospect of significantly higher prices, investors are unclear of what level of tariffs will be applied to which country.

For example, China stands to face the largest tariffs. At one point, President Trumpthreatened the country with 145% tariffs. That’s since been walked back, but the president made it clear that (for now), the tariffs won’t be 0%.

That’s a wide range of outcomes for companies to consider. Many retailers went around this by frontloading merchandise in anticipation of tariffs. But that will only stretch so far. This is particularly going to impact apparel companies that have much of their supply chain in China or other Asian countries. Even with that, these companies operate on tight margins that make it impractical to onshore operations.

With that in mind, it’s important to know which retail stocks have significant exposure to China and other Asian countries. That’s the case with the three stocks on this list. For that reason, investors may want to wait until, when, and if more tariff details are available before taking a position.

American Eagle May Be Cheap for a Reason

At a time when many stocks are overvalued, investors can’t say that of American Eagle Outfitters Inc. (NYSE: AEO). The stock trades at a price-to-earnings (P/E) ratio of just 9.14, and its forward P/E is around 6x. Those are low numbers even by the company’s past standards. And the analyst forecasts on MarketBeat give the stock a consensus price target of $15.50, a 45% gain from its price as of this writing.

However, there are times when stocks are cheap for a reason. And this appears to be one of those times. AEO stock is down 33% in 2025 and 55% in the last 12 months. Revenue and earnings have been fine, although growth is slowing. The larger issue is the company’s exposure to Asian countries for its manufacturing. As of April 2025, American Eagle uses 101 factories in China to source its goods. It also relies on 67 facilities in Vietnam as well as other Asian countries.

The good news is that deals are likely with many of these countries fairly soon, with the exception of China. However, with so much exposure to China, the short-term outlook for AEO stock makes it a tough buy.

Levi Strauss May Not Be the Best Fit Right Now

Levi Strauss & Co. (NYSE: LEVI) had the misfortune of reporting earnings on April 7, 2025, right after the tariff announcement. The company known for its iconic jeans put up solid numbers, and the stock bounced off its 52-week low. But the company’s exposure to Asian nations such as China, Cambodia, and Vietnam put it front and center in tariff talks.

However, like American Eagle, Levi Strauss stock is trading at an attractive P/E ratio that’s far below its historical average. The company also pays a dividend that yields 3.3% as of this writing. The payout ratio of 58% is somewhat elevated, but right now the dividend appears safe.

Analysts give LEVI stock a Moderate Buy rating with a consensus price target of $19.18 which is a gain of 21%. The announcement of a trade deal with a country like Vietnam could be an immediate lift for the stock, but it negotiations take longer than expected, investors should expect longer term downward pressure.

Tariffs Are Only the Latest Headwind for VF Corporation

VF Corporation (NYSE: VFC) is the parent company of well-known apparel and footwear brands, including The North Face, Vans, Timberland, and Dickies. The stock had been a strong performer among apparel names until February 2025. However, the company is now facing challenges on multiple fronts, starting with declining year-over-year revenue, which may signal that consumers are beginning to pull back on discretionary spending.

VF will be one of the most impacted by tariffs. The company has approximately 600 factories in China and Vietnam. VF will look for solutions, but those will involve countries with lower tariff rates, not moving production back to the United States.

This dual headwind is showing up in recent analyst ratings. While the consensus price of $21.70 would be a gain of over 80%, Citigroup Inc. (NYSE: C), Piper Sandler, and The Goldman Sachs Group Inc. (NYSE: GS) have sharply lowered their price targets in April 2025.

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The 5 Top Buys for May: Strong Signals at Critical Support Levels

The five top buys for May have two things in common: leadership positions in technology and strong signals at critical support levels. These stocks corrected in late Q1 and early Q2 but have regained traction at critical levels and are firing solid entry signals for investors. These signals include increased volume, stochastic crossovers, MACD swings, and bullish activity aligning with long-term trends.

The takeaway is that Magnificent Seven stocks like NVIDIA (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), and Microsoft (NASDAQ: MSFT), which have been leading the market for years, are in position for robust rebounds, and other significant AI-centric companies, including Oracle (NYSE: ORCL) and Palantir (NASDAQ: PLTR), are following suit.

The catalyst for the bigger move will likely come with the Q1 earnings reports due in May.

NVIDIA: Outlook Is Reset, Market Can Regain Traction

Like the rest of the S&P 500 (NYSEARCA: SPY), NVIDIA’s stock price reset is due to several factors affecting the earnings outlook. However, the correction appears to be over, with the worst tariff fears behind us and an improving outlook for onshoring Blackwell and subsequent Rubin production. The loss of China as a customer is a concern, but it is offset by Western demand, which is sufficient to make up the difference.

The analysts have mixed views on Q1. About half have lowered revenue and earnings estimates since the Q1 report, while the other half have increased them, resulting in a consensus forecast for 62% year-over-year growth and a strong margin.

Analyst sentiment trends are bullish despite the recent price target reduction. Analyst coverage is increasing, sentiment is firming with a bullish bias to the Moderate Buy rating, and the consensus target forecasts a 50% upside from late April trading levels.

Amazon Has Low Bar to Hurdle and Dual Tailwinds to Drive It

Amazon has dual tailwinds arising from its leadership position in the cloud and consumer strength. Consumers have shifted their habits, but spending remains strong, and Amazon is well-positioned to benefit from this. At the same time, its AWS data center business and AI applications are in demand, aiding its clients and core, consumer-oriented business.

This means that outperformance is likely in Q1. The beat could be substantial due to the low bar set by analysts and about three-quarters of the 28 tracked by MarketBeat lowered their forecast for the quarter, expecting growth to slow into the high single-digit range compared to the previous quarter and year.

They rate the stock as a Moderate Buy and see it advancing by 30% at the consensus.

Microsoft Is Gaining Ground in the Cloud

Microsoft’s business model is exceptionally diversified, spanning enterprise software, cloud computing, AI services, cybersecurity, gaming, and professional networking through LinkedIn. Its customer base includes companies across virtually every industry vertical, from healthcare and finance to manufacturing and education, providing a robust and resilient revenue foundation.

The strategic integration of artificial intelligence and cloud solutions, particularly through Azure and partnerships like OpenAI, has significantly reinforced Microsoft’s leadership position in cloud infrastructure and next-generation AI-enabled enterprise services.

Analysts anticipate solid revenue growth for Microsoft’s fiscal Q3/calendar Q1 earnings report.

However, in line with broader industry trends observed in peers such as Amazon, growth rates are expected to moderate into the high single-digit percentage range as macroeconomic headwinds and a maturing cloud market exert some pressure.

Key catalysts for the stock include the potential for earnings outperformance relative to conservative expectations, continued strength in Azure and AI-related services, and the prospect of management issuing strong forward guidance, particularly if AI monetization initiatives begin translating more visibly into top-line results.

Oracle: On Track for a Trillion-Dollar Valuation?

Oracle is still small compared to the Magnificent Seven but is on track to achieve a trillion-dollar valuation within a few years. The company’s transition to the cloud and leaning into AI and AI services has set it up as a budding hyperscaler fundamental to AI infrastructure. Its database services are ubiquitous across the cloud and facilitate AI training globally.

The stock is set up to rally strongly after the Q4 release because 100% of analysts lowered their forecasts despite the strengths shown in Q3. While reported results were mixed, the internals, including RPO and backlog, are accelerating robustly and suggest the same for revenue and earnings as backlog demand is met.

Palantir: Companies and Governments Need It

Palantir’s business is accelerating due to several factors, including data-driven insights, threat detection, and its impact on efficiency. Recent developments include a partnership with Google.

This partnership makes Palantir a gateway that provides many businesses with access to government contracts. Valuation is a concern for PLTR investors in 2025, but it is offset by the robust growth outlook and the high likelihood that forecasts are too low. Other catalysts in 2025 include expectations for increased government defense spending and expanding partnerships with private businesses.

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Why D-Wave’s Project With Davidson Is a Game-Changer For Quantum

Down about 8% in the last month, quantum computing firm D-Wave Quantum Inc. (NYSE: QBTS) is a leader in an industry hit hard by the escalating trade war between the United States and China. While the recent slump may present an opportunity for investors to buy this quantum industry standout, there are now two schools of thought surrounding QBTS shares.

On one hand, a recent report by short-seller Kerrisdale Capital suggests that D-Wave’s annealing technology, its quantum supremacy achievement from earlier in the year, and other attainments the company has promoted are less commercially viable than investors may think. On the other hand, though, bullish investors might point to the firm’s aggressive approach to getting products to market, including its Leap Quantum LaunchPad program started earlier in the year, as evidence that its tools have marketable applications.

In late April, D-Wave completed a key project in partnership with defense technology consultancy Davidson Technologies. This project may have the potential to drive D-Wave’s marketability further as the company solidifies its value to the defense industry.

Physical Assembly of Annealing System

D-Wave’s project with Davidson involved the physical assembly of a D-Wave Advantage2 annealing quantum system, which has been available through the company’s Leap cloud service since February 2024. This latest effort is the first-ever physical annealing quantum computer built on-premises in the state of Alabama.

Developing a physical assembly is important in this case because the project aims to support secure quantum research in national defense use cases. In this case, the partnership with Davidson is crucial, as the annealing quantum computer is housed at that company’s headquarters, and Davidson will provide essential internal R&D and workforce development to deploy the computer.

Impacts for D-Wave and the Quantum Industry

Once the computer is calibrated and operationalized, it can be used to conduct collaborative research with defense agencies, academic institutions, and government labs, among other partners. The company aims to make the computer an essential tool for the U.S. Department of Defense.

With many quantum computing firms developing standalone technology that is not necessarily optimized for practical use across industries at this point, the potential success of D-Wave’s latest computer in real-world defense applications could be transformational. The potential use cases for the annealing computer in defense include space operations, missile systems, and optimized logistics, among many others.

Pushback on Annealing Tech

Kerrisdale and others have pushed back on D-Wave’s focus on annealing technology, suggesting that its benefits over classical computing strategies may not be confirmed. Notably, the company has only recently entered the innovation race to develop alternative quantum computing technologies like gate-model systems. Some analysts view this latter technology as more likely to have real-world marketability than annealing systems.

In a sense, D-Wave’s physical annealing computer in Alabama provides the company an opportunity to demonstrate just that—the real-world usefulness (in this case, in the defense space) of annealing quantum. Once the machine is operationalized, investors interested in D-Wave’s future should watch closely. If it becomes clear that this computer has tangible benefits for the defense industry—ideally ones that can lead to additional contracts or other revenue-generating actions—it becomes a significant piece of evidence in favor of D-Wave’s technological approach.

Is Now the Time to Buy D-Wave?

On the heels of D-Wave’s project with Davidson, investors may be wondering if now is the best time to invest in this stock.

Shares of QBTS have traded horizontally throughout most of April, though they are down about 27% year-to-date due to a brief decline early in the year and another in March.

With a price-to-sales ratio of more than 230, D-Wave could hardly be called a value play. Indeed, the company has received criticism for being overvalued relative to its fundamentals. 2025’s price movement helps to make it a more attractive venture in this regard.

Still, many investors are likely to find the stock too costly, particularly given D-Wave’s historical difficulty securing consistent revenue. However, should the Davidson project provide a clearer pathway to profitability, this latest development could give investors something concrete to focus on.