Navigating the AI and Onshoring Trade Tailwinds in a Post-Tariff Era

The Q2 2025 earnings season has underscored a seismic shift in the AI and tech infrastructure landscape. Companies like Palantir (PLTR), Alphabet (GOOGL), and Akamai (AKAM) have not only exceeded revenue expectations but also signaled a structural reorientation of global demand toward AI-driven solutions. Meanwhile, the Trump administration's aggressive trade policies and onshoring agenda are reshaping supply chains, creating both headwinds and tailwinds for the sector. For investors, the challenge lies in identifying undervalued stocks that can capitalize on these dual forces—leveraging strong earnings momentum while navigating the geopolitical and regulatory terrain.

The AI Infrastructure Boom: A Sector in Overdrive

The AI infrastructure sector is experiencing a renaissance, driven by surging demand for cloud computing, data center expansion, and AI-specific hardware. Palantir's Q2 results exemplify this trend: its $1 billion revenue milestone, 48% year-over-year AI software growth, and a $10 billion U.S. Army contract highlight its dominance in government AI adoption. Similarly, Alphabet's Google Cloud revenue surged 32% to $13.6 billion, with AI token processing doubling to 980 trillion. These figures reflect a broader industry-wide acceleration, as enterprises and governments alike prioritize AI as a strategic asset.

However, the sector's growth is not uniform. While leaders like NVIDIA (NVDA) and Microsoft (MSFT) dominate headlines, smaller players and niche enablers are often overlooked. This is where the intersection of strong earnings and geopolitical tailwinds becomes critical.

Trump's Trade Policy: A Double-Edged Sword

The Trump-EU trade deal, finalized in July 2025, has introduced a complex mix of opportunities and challenges. The agreement's 15% tariffs on EU exports to the U.S., excluding key categories like steel, aluminum, and pharmaceuticals, have disrupted cross-border supply chains for AI hardware. For instance, NVIDIA's Blackwell architecture, a next-gen AI chip, faces delayed adoption in Europe due to these tariffs. Yet, the deal's $750 billion EU energy purchase commitment and $600 billion U.S. infrastructure investment create a fertile ground for AI infrastructure firms.

Onshoring initiatives, a cornerstone of Trump's economic agenda, are amplifying this dynamic. The administration's focus on domestic manufacturing and energy security is driving demand for AI infrastructure in energy optimization, grid modernization, and supply chain resilience. Companies that align with these priorities—such as C3.ai (AI) and Astera Labs (ALAB)—are positioned to benefit from both policy tailwinds and sector growth.

Undervalued Gems: Where to Focus in the AI Ecosystem

1. C3.ai (AI): A Pure-Play AI Infrastructure Play
   C3.ai's forward P/S ratio of 7.24X, well below the industry average of 18.26X, makes it a compelling undervalued stock. Its enterprise AI deployments in energy and healthcare align with the EU's energy purchase commitments and U.S. onshoring efforts. With the EU's $750 billion energy infrastructure plan, C3.ai's grid optimization tools could see explosive demand.

1. Astera Labs (ALAB): CXL Technology and Strategic Partnerships
   Astera's 143% stock price surge in Q2 2025 reflects its strong position in CXL (Compute Express Link) technology, a critical enabler for next-gen data centers. Despite being removed from Russell benchmarks, its partnerships with Alchip and NVIDIA, along with a robust product pipeline (Leo and Scorpio series), position it to capture market share in AI cluster infrastructure.

2. Nebius Group (NBIS): Scaling AI Cloud Infrastructure
   Nebius's 625% year-over-year revenue growth in Q2 2025 underscores its role as an AI cloud provider. Backed by NVIDIA, the company's plans to secure 1 GW of power by 2026 align with the Trump administration's grid-modernization goals. Analysts' recent upgrades and Goldman Sachs' “buy” rating highlight its potential.

Strategic Considerations for Investors

• Diversify Within the Sector: While the “Mag 7” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) dominate AI narratives, smaller enablers like C3.ai and Astera Labs offer higher growth potential with lower valuations.
• Monitor Policy Shifts: Trump's trade policies and onshoring mandates will continue to influence supply chains. Prioritize companies with direct exposure to U.S. energy and infrastructure projects.
• Balance Risk and Reward: NVIDIA and Meta (META) remain dominant but face regulatory and geopolitical risks. C3.ai and Nebius, while riskier, offer asymmetric upside in a sector poised for disruption.

Conclusion: Positioning for the AI Supercycle

The confluence of Q2 earnings strength, AI adoption, and Trump-led onshoring policies is creating a unique inflection point for the tech sector. Investors who focus on undervalued AI infrastructure stocks—those with strong technical capabilities, strategic partnerships, and policy alignment—stand to benefit from the sector's long-term growth. As the AI supercycle accelerates, the key to outperformance lies in identifying companies that can scale infrastructure while navigating the evolving geopolitical landscape.

In this environment, patience and precision are paramount. The next phase of the AI revolution will reward those who act decisively, leveraging both earnings momentum and policy tailwinds to build resilient, high-growth portfolios.