Companies

We evaluated AI’s staying power based on March earnings from key tech providers. Growth rates are not slowing as quickly as many investors had feared, suggesting that AI’s momentum remains intact. Concerns about the pace of improvement in AI models may actually strengthen the case for increased investment. Fundamentals and the outlook for AI growth and investment are either stable or improving compared to three months ago — despite ongoing uncertainty around tariffs, macroeconomic conditions, and the speed of model innovation.

Apple’s March results and June guidance underscore the company’s fundamental strength. However, Cook’s uncertainty about the business in the back half of this year tempered enthusiasm, and shares sold off about 4%. As for tariffs and the supply chain, the company is taking proactive steps to navigate the storm. Bottom line: while you can’t count on the macro, you can count on Tim Cook to make the right decisions for both the near and long term.

Meta's March earnings exceeded expectations and the company raised revenue guidance for June. To date, these results are the best example of a company seeing measurable returns from AI. Increased engagement and improved margins highlight the operational benefits of AI at scale. The best part for Meta is they're just getting started.

Apple’s March earnings stand out as a uniquely forward-looking moment in my 20+ years of analyzing and investing in the company. The focus will be less on the quarter’s numbers and more on the company’s comments about its long-term positioning in four key areas: Tariffs, manufacturing in China, demand in China, and Apple Intelligence.

Investors will largely look past Meta's March results and focus on the guidance. With 10% of Meta’s ads tied to Chinese sellers, a one-third cut in spend could dampen 2025 growth estimates from 13% to 8%, inline with Google. Reality Labs cuts should keep earnings unchanged. Within a year, the China headwind will be sorted out, and the company's revenue growth should be higher for longer based on injecting AI across its product lines. As for Capex, I expect it to remain unchanged at $60-$65B for the year.

While I expect Street EPS and revenue estimates for 2025 to be revised downward following the March earnings report, that reality is largely noise for Tesla investors. The takeaway for most will likely be that 2025 is a throwaway year—one that sets the stage for a major rebound in 2026 and beyond. Tesla is in a unique position: its opportunity in physical AI is so compelling that investors are willing to look past what will likely be a difficult year. In my view, 2025 doesn’t matter; the business is poised for meaningful improvement starting next year.

​Don't let the recent downturn in the AI trade mislead you. The reality is that AI-powered service providers are struggling to keep up with demand, and AI infrastructure providers are unable to build capacity fast enough. All the potential that drove AI stocks higher in 2024 remains intact. At Deepwater, we continue to believe there are still 2–3 years left in this bull market.​

Tesla’s March deliveries missed expectations, down 13% y/y, largely due to brand damage and to a lesser extent production changeover. June will likely get worse before improving in September and we expect CY25 deliveries to decline 9%. However, CY26 is setting up to be a rebound year with 35% delivery growth driven by brand recovery, renewed EV demand, and a more affordable model. Longer term, the investment case continues to hinge on Tesla solving autonomy and scaling robotics.

Modeling Tesla is getting progressively more difficult as they navigate this period of brand damage, increased investments, and macro uncertainty. On top of that, the company does not give detailed guidance. All of that said, we’re putting together our best guess on how the numbers shake out over the next couple of years. We expect CY25 revenue to be flat (vs. Street at +7%) and non-GAAP earnings to fall between $2.00–2.20 (vs. $2.74). In CY26, we expect revenue to grow 35% (vs. Street at 22%) and earnings to rise to $3.00–3.40 (vs. $3.76).

Deepwater Frontier Tech Spotlight: Vertiv Ticker: VRT Market Cap: $30B Vertiv is a global provider of power and thermal management solutions essential to the operation of data centers that are powering AI. As AI-driven workloads lead to exponential growth in…

This question comes at a time when Street estimates likely need to be revised downward. Following the expected reset on April 2nd, I estimate global demand for Tesla's will rise by approximately 1.5% over the next 12 months as a result of the new tariffs. While Tesla prices may inch up due to tariffs on auto parts, prices for other automakers are expected to increase even more—making Teslas relatively more affordable compared to the competition.

Jensen Huang’s keynote reinforced that Nvidia’s product roadmap remains years ahead of AMD and custom silicon. He also provided further support for his recent earnings call comments, emphasizing that the AI infrastructure buildout is still in its early stages. However, the optimistic outlook was met with some skepticism, as investor focus shifts to the next critical datapoint on the health of the AI trade: hyperscaler CapEx reports due in late April. I continue to believe the AI buildout remains in its infancy, positioning Nvidia to be a multi-year beneficiary.