AI Investment Resilient Amid Tariff Strain; Tesla Faces Employee Backlash; Fed Holds Interest Rates Steady

Goldman Sachs reports that President Trump's tariffs will impact corporate hiring and marketing, but AI investment remains protected. Meta Platforms has increased its capital expenditure for AI infrastructure. Tesla faces internal issues after firing Matthew LaBrot, a sales employee who criticized CEO Elon Musk's political actions. The Federal Reserve has kept interest rates steady for the third meeting, citing economic uncertainty.

Tariffs Reshape Corporate Spending Priorities

Goldman Sachs analysts, including Eric Sheridan, have concluded that the macroeconomic effects of Trump’s tariffs—announced on April 2 as part of a “Liberation Day” trade policy—are likely to create volatility in operating expenses, particularly in headcount and marketing. Sheridan noted that while companies are expected to reduce spending in these areas, AI investment is likely to remain protected due to competitive pressures and long-term strategic importance.

“The macro will end up with more volatility on operating expenses — that’s head count, that’s marketing spend, that’s very, very long duration projects,” Sheridan said in a recent Goldman Sachs Exchange podcast. “In contrast, companies’ spending on AI is more protected.”

Goldman Sachs estimates that while the tariffs may create approximately 100,000 new manufacturing jobs, they could also result in the loss of up to 500,000 jobs across other sectors. Several companies, including Mack Trucks, Volvo Group, Stellantis, and Estée Lauder, have already announced layoffs, citing the impact of tariffs and market uncertainty.

Meta Doubles Down on AI Infrastructure

Meta Platforms has responded to the shifting economic landscape by increasing its 2025 capital expenditure guidance from a previous range of $60–$65 billion to $64–$72 billion. The company emphasized that AI remains its “major theme,” with CEO Mark Zuckerberg reaffirming the importance of long-term investments in AI data centers and infrastructure.

Despite rising input costs due to tariffs, Meta has chosen to maintain its AI spending trajectory. The company’s average price per ad rose 10% year-over-year, outpacing the 6% growth recorded in the previous year, suggesting that AI-enabled ad tools are delivering measurable returns. Meta also lowered its total expense guidance slightly, from $114–$119 billion to $113–$118 billion, reflecting internal cost efficiencies in areas such as salaries and marketing.

Sheridan pointed to Meta’s strategy as indicative of a broader trend: “We continue to find ways to find efficiencies inside the organization, but we are not at a point where we want to sacrifice long-duration investments.”

Tesla Employee Fired After Protesting Musk’s Leadership

Tesla is facing internal unrest following the dismissal of Matthew LaBrot, a longtime sales employee who launched a website criticizing Elon Musk’s political involvement and its perceived impact on Tesla’s brand. LaBrot, who joined Tesla in 2019 and held a program management role in sales training, said he became disillusioned with Musk’s leadership after the CEO’s acquisition of Twitter and subsequent political endorsements, including support for President Trump.

On April 24, LaBrot published an anonymous open letter calling for new leadership at Tesla. The next day, he attended a protest event in California with his Cybertruck spray-painted with slogans such as “Pro Clean Energy, Pro Sustainability, Pro EV, Pro Tesla, Anti Elon.” Less than 24 hours later, he was terminated.

Tesla did not respond to requests for comment. LaBrot stated that he was told his firing was due to using company resources to build the protest website, a claim he denies.

Tesla has recently experienced declining sales and increased inventory levels. In the first quarter of 2025, deliveries dropped 13% year-over-year, and California registrations fell more than 15%. LaBrot said that foot traffic at showrooms had declined and that sales teams were under pressure to close every lead, a shift from Tesla’s previous backlog-driven model.

Federal Reserve Holds Rates Steady Amid Uncertainty

The Federal Reserve announced on Wednesday that it would maintain the federal funds rate at 4.25% to 4.5%, marking the third consecutive meeting without a change. Chair Jerome Powell cited “heightened uncertainty” in the economic outlook, including risks from inflation and tariffs.

“The economy is in a solid position,” Powell said, “but inflation has come down a great deal and remains somewhat above our 2% longer-run objective.”

The Fed’s decision follows three rate cuts in late 2024 and reflects a cautious stance amid concerns about stagflation. According to the CME FedWatch tool, the probability of rates remaining unchanged at the June and July meetings has increased to 75% and 30%, respectively.

The Federal Open Market Committee (FOMC) emphasized that it is monitoring risks to both sides of its dual mandate—employment and price stability—and will remain patient until clearer economic signals emerge.

References

• Trump's tariffs will hit hiring and marketing, but not AI spending, Goldman Sachs says
• Here Are The Major U.S. Companies Warning About Tariffs In Their Earnings Reports
• Nvidia Investors Just Got Great News From Meta Platforms
• Corporate giants ramp up AI spending amid persistent ‘FOMO’
• A Tesla worker built a website protesting Elon Musk. He was fired a few days later.
• Federal Reserve holds key interest rate steady amid economic uncertainty