Best Buy Shares Plunge 3.7% on Tariff Fears and Macro Risks Despite Strong Q2 Earnings

Best Buy Co., Inc. (NYSE: BBY) shares plummeted to their lowest level since August 2025, with an intraday decline of 6.63% and a closing drop of 3.70%. The selloff reflects investor concerns over macroeconomic risks and strategic uncertainties, despite recent operational improvements.

Strong Q2 earnings highlighted resilience in AI-powered electronics and gaming hardware sales, with adjusted EPS of $1.28 and revenue of $9.44 billion exceeding forecasts. However, the company maintained cautious full-year guidance, citing uncertainty around U.S. tariffs and their potential to dampen consumer spending and elevate supply chain costs. Management emphasized that while near-term demand for tech products remains robust, long-term risks from trade policy and economic volatility weigh on confidence.

A strategic partnership with IKEA to pilot a U.S. kitchen and storage planning service introduced new growth opportunities but also underscored execution risks. The collaboration aims to diversify Best Buy’s revenue streams beyond electronics, yet analysts note its success depends on consumer adoption and integration of home technology solutions. Institutional investor activity has been mixed, with entities like Mackenzie Financial Corp and TCW Group Inc. increasing stakes, while others, such as ING Groep NV, reduced holdings. This divergence signals ongoing skepticism about the company’s ability to navigate a competitive retail landscape.

Supply chain adjustments, including a shift away from China to mitigate tariff risks, have reduced reliance on high-cost manufacturing hubs. Best Buy has cut China-sourced product costs to 30–35%, enhancing gross margins. However, management acknowledged that the retail sector remains vulnerable to macroeconomic shifts, particularly in consumer electronics, where competition from online retailers and discounters persists. Analysts highlight that while strategic moves like the IKEA partnership and supply chain diversification position Best Buy for long-term growth, near-term headwinds from tariffs and economic uncertainty continue to pressure the stock.