1Q25 Earnings: Tariffs, Capex and Margin Defense

This article is based on a recent LinkedIn Live event hosted by Marvin Labs. The discussion featured Alex Hoffmann, CEO and co‑founder of Marvin Labs, and Anupriya Halder, equity research analyst.

We focused on how 1Q25 earnings reflected tariff policy shifts, supply‑chain risk, capital allocation, and the ramp in AI infrastructure. We also covered how analysts can speed up workflows without losing traceability. Watch the full conversation below.

The macro lens dominated 1Q25

Management commentary across sectors prioritized three topics: tariffs, supply‑chain resilience, and pricing discipline. That framing tracks with the policy backdrop. In 2024 the US expanded tariffs on select Chinese imports, including EVs, batteries, solar, and semiconductors, with new rates staged over 2024–2026. See the administration’s May 2024 fact sheet for scope and timing here. Meanwhile, Red Sea rerouting continued to add distance, time, and insurance costs to Asia–Europe trade lanes, with UNCTAD tracking a sharp decline in Suez transits since late 2023 here.

Across retail and consumer goods, teams highlighted supplier negotiations, selective price actions, and mix as first levers. Thin margins leave little room to absorb broad input shocks. Inventory timing matters as well. Many retailers entered 1Q with pre‑tariff stock, which muted early P&L impact and explains why several chose to be cautious on pricing guidance.

Q2 is going to be the interesting one. Right now, it is all talk.

Margin defense without sacrificing growth

Companies described three practical responses:

• Pass through price selectively where brand equity or category dynamics allow.
• Reshape the portfolio. Rationalize low‑margin SKUs and lean into private label or higher‑contribution items.
• Rework sourcing to reduce tariff exposure, while accepting near‑term disruption as supply chains reset.

None of these are costless. Retailers cannot fully internalize tariff shocks, and supplier cost‑sharing has limits. Expect a more honest signal on pricing in Q2 as pre‑tariff inventory clears and new purchase orders flow through COGS.

Hyperscalers kept spending on infrastructure

In technology, the infrastructure build continued. Meta raised and reiterated a large 2024 capex plan tied to AI data centers and networking, citing a $35B–$40B range in its April 2024 results here. Microsoft reported elevated cloud‑related capex in FY24 as AI demand grew across Azure here. The mix is shifting toward more inference at scale, which drives recurring compute and networking requirements.

Alphabet’s guidance language continues to flag regulatory scrutiny as a structural headwind for product and distribution optionality, a theme underscored by ongoing US and EU cases around search and app distribution. Background on the US search case is available from the Department of Justice here.

Apple: services resilience meets hardware pressure

Apple’s latest results underscored the importance of high‑margin services as hardware demand softened, particularly in China. Apple reported an all‑time revenue record for Services for the quarter ended March 30, 2024 here. On platform strategy, Apple announced “Apple Intelligence” and deep integration with ChatGPT in June 2024, positioning for device‑level AI through partnerships rather than owning a frontier model here.

Apple does not need the best model. It needs one that works well in its ecosystem without $50B of model spend.

The legal and distribution backdrop also matters. The US case against Google over default search deals underscores potential changes to traffic acquisition payments that have historically supported Apple’s services economics here.

On supply chain, Apple has expanded assembly capacity in India to diversify China exposure. Reuters reported a sharp increase in iPhone production value in India in FY24 here. The strategic question is margin versus resilience if further regionalization is required to navigate shifting tariff regimes.

Autos and mobility: reality catching up with narratives

Tesla’s unit momentum slowed while autonomy remained the headline promise. The company’s own release showed lower deliveries in 1Q24 year over year here. Investors continue to weigh long‑dated robotaxi narratives against nearer‑term volume and margin delivery. By contrast, Uber highlighted stronger revenue trends and improving profitability through 2023–2024, including sustained adjusted EBITDA gains as scale improved here.

Several automakers have reframed full autonomy as a multi‑year R&D line item rather than a near‑term catalyst. High‑profile pullbacks and resets in the space since 2022–2023 support that tone, including program changes at major OEMs and AV subsidiaries.

International expansion and non‑AI capex

The group also discussed parks and experiences capex. Disney has guided to significant multi‑year investment in its Parks, Experiences, and Products segment and has telegraphed interest in international expansion. The specifics vary by market and timing, but the core message is that capex is a strategic lever well beyond AI.

What to watch into Q2

• Inventory timing effects should fade. Expect cleaner reads on tariff pass‑through and gross margin by category.
• Portfolio mix and SKU rationalization will be more visible in retail and consumer earnings decks.
• Hyperscaler capex guidance. Look for any sign of pacing changes as AI workloads scale from pilot to production.
• Apple’s services growth durability as China hardware competition intensifies.
• Autos and mobility. Watch unit guidance, regional pricing actions, and any autonomy program updates.

Investors should also refresh channel checks across key geographies. When visibility is low and pricing is politicized, on‑the‑ground checks can validate what top‑down commentary does not.

CEOs are extremely cautious right now. Even they do not know what is happening next.

How AI co‑pilots are changing earnings workflows

The panel closed with a practical view on AI in research. The near‑term value is efficiency and coverage depth, not headline‑grabbing automation. Useful capabilities include:

• Rapid surfacing of material insights from primary documents while stripping boilerplate.
• Tracking and diarizing guidance statements, then auto‑evaluating them next quarter for accountability.
• Speeding up model refresh and sentiment review across a full analyst coverage universe without losing traceability.

Bottom line

1Q25 was about discipline under uncertainty. Tariff policy, supply‑chain risk, and uneven demand forced real trade‑offs on pricing, mix, and capex. Big Tech kept investing. Services strength helped buffer hardware softness at Apple. Autos continued to recalibrate autonomy narratives. Into Q2, the test shifts from talk to measurement as inventory lags roll off and pricing actions show up.

Watch the full video to hear the complete discussion and perspectives from the session.