BlackRock: Maintain Overweight on AI Theme and US Stocks

According to the Zhitong Finance APP, BlackRock stated that U.S. risk assets are in a tug-of-war. On one hand, U.S. companies have achieved robust earnings performance driven by the AI theme; on the other hand, tariffs have impacted U.S. economic growth and raised inflation levels. From the second quarter earnings report data this year, the AI theme is prevailing, but the question of who will bear the cost of tariffs remains. Preliminary signs indicate that consumers and businesses will share the burden of tariff costs. BlackRock believes that the strong performance of U.S. companies may mitigate the impact of tariffs, thus maintaining an overweight view on the AI theme and U.S. stocks.

BlackRock pointed out that although the current tariff levels are several times higher than at the end of 2024, a series of trade agreements announced by the U.S. in recent weeks have reduced the uncertainty regarding the final actual tariff levels. The impact of tariffs on U.S. consumers has not yet fully manifested, partly because businesses imported goods in advance in anticipation of tariff implementation in April. Since the new tariffs do not apply to goods that have already left the port, shipping may take weeks, and even when goods arrive, companies can delay payment. Therefore, many businesses are waiting for clearer tariff policies before raising prices. However, this buffering effect is gradually weakening. U.S. second-quarter inflation data shows that the rate of increase in durable goods prices has reached the highest level since 1991, except during the COVID-19 pandemic. This indicates that consumers have begun to bear some of the tariff costs, especially in the home appliance and electronics sectors. Companies have also started to absorb tariff costs, with global automotive manufacturers most affected by tariffs gradually disclosing profit write-downs.

BlackRock believes that the current state of the automotive manufacturing industry highlights the complexity of the tariff issue. As tariff policies are implemented, profits for U.S. automotive manufacturers such as General Motors and Ford have significantly shrunk, and these companies have chosen to absorb the tariff costs themselves. Japanese and South Korean automotive manufacturers are digesting tariff costs by lowering the prices of cars exported to the U.S. This pricing pressure is particularly severe in Europe, where local car manufacturers must compete with lower-priced Chinese electric vehicles, thus limiting their ability to raise prices. In contrast, high-end automotive manufacturers like Ferrari are raising prices, highlighting the importance of pricing power.

For this reason, BlackRock believes that corporate earnings resilience is particularly important. The automotive manufacturing industry falls under the manufacturing sector. The supply chain in the industrial sector is the most integrated globally and is primarily manufacturing-focused, making it likely to be most affected by tariffs. However, relevant data shows that the industrial sector is the best-performing sector in the S&P 500 index this year. This sector has risen about 15% year-to-date, while the S&P 500 index has risen 6% during the same period. What is the reason? This is because the industrial sector benefits from AI infrastructure construction and other key themes driven by disruptive trends, such as geopolitical fragmentation and increased defense spending this year. Therefore, in the current environment, there is a tendency to conduct a detailed analysis of the impact of tariffs and allocation views from a sectoral perspective and to adopt proactive strategies to achieve returns