For the first time ever, Amazon on Thursday set itself up to seize the crown as the world’s largest company by quarterly revenue from Walmart, which has reigned for over a decade and will report its own results later this month. But that is not to say there is peace in the kingdom.

The newly enthroned international retail king is unexpectedly caught up in the brewing trade wars in the early goings of Trump 2.0.

Shoppers Without Borders

Mexico and Canada may be off the tariff hook (for at least another month, roughly), but the Trump administration may soon open a new trade war front in Europe, and it’s still aggressively going after all manner of trade with China. So far, that’s amounted to an additional 10% general tariff on Chinese imports (which is still way less than the import tax as high as 60% that the president’s campaign previously floated). Trump 2.0 also closed the de minimis exemption, which exempted overseas shipments worth less than $800 from import duties. It was the loophole that gave rise to budget e-commerce players like Shein and Temu — as well as Amazon’s recently launched competitor service, Haul.

According to MarketPulse, nearly one-third of the 10,000 largest third-party sellers on Amazon are based in China. Meanwhile, Morgan Stanley analysts this week published a note arguing that Amazon’s first-party products face major exposure to China. Which means that all told, the world’s leading e-commerce player could be gearing up for some serious pain:

• Morgan Stanley estimates that about 25% of the cost of Amazon’s first-party products comes from China, making the company particularly vulnerable to tariffs. Amazon’s first-party merchandise accounts for a smidge under half of all products sold on the platform. 
• That 25% exposure is way above the 10% exposure average for e-commerce platforms, Morgan Stanley found. Fashion retailer Revolve had the next highest, at 22%, while eBay was 11% exposed and Etsy just 3%.

Still, Amazon’s sheer scale gives it some baked in advantage, especially when it comes to the end of de minimis exemptions. “I think [the de minimis rule change] helps retailers like Walmart and Amazon more than dedicated low-cost retailers,” Greg Zakowicz, senior e-commerce expert at e-commerce marketing platform Omnisend, told The Daily Upside. “These companies meet what consumers look for in their shopping journeys: value. There could be several outcomes.”

Upstream: While Amazon’s fourth-quarter results beat expectations Thursday, it announced lower than expected guidance for the current three-month period. The company pointed to “an unusually large, unfavorable impact” from foreign exchange rates as one of the White House retaliatory tariff’s big knock-on effects, along with the strengthening of the US dollar. And to think we’re just getting started.

Being an industrial conglomerate isn’t what it used to be. 

The Charlotte-headquartered Honeywell announced plans to spin off its aerospace and automation businesses into separate entities on Thursday, adding to a previous plan to hive off its advanced materials unit. Now comes a second wave of pressure to unlock value from the parts that once made up the whole.

All Things Must Pass

For decades, the industrial conglomerate was an icon of American markets: giant firms that combined diverse, sometimes unrelated, businesses under one umbrella, in theory, saving on shared overhead and insulating themselves from the ups and downs of exposure to a sole industry.

In recent years, investors have pressured those giants to go in the other direction: break up and simplify so Wall Street can more accurately value them. Among the conglomerates to go this route have been Alcoa in 2016, United Technologies in 2018 and, last year, General Electric. The GE companies, in particular, have rapidly become the poster children for the breakup movement: The aerospace, energy and healthcare spinoffs that came out of the former conglomerate are today worth nearly four times what GE was in 2022. GE Aerospace had a market valuation of $168 billion last April when the breakup was finalized. On Thursday, it was $221 billion.

Citing this success, activist investor Elliott called in November for Honeywell to follow suit. Three months later, its wish came true. Now comes the hard part of unlocking value. Because, in fact, corporate splits are kind of like when The Beatles broke up — for every masterpiece like All Things Must Pass or John Lennon/Plastic Ono Band, there’s a Ringo’s Rotogravure or Ringo the 4th: 

• Invesco’s Spin-off ETF, which tracks S&P 500 firms that spin out of larger parents, has trailed the index for a decade. There is, on the other hand, some evidence of gains out of the gate: RBC Capital Markets found a dozen industrial spinoffs gained 50% in the twelve months after going it alone.
• Bain & Co. analyzed 350 public company spinoffs from 2000 and 2020: Half of them created no shareholder value two years post-breakup, and 25% declined in value. The remaining 25% that did go up in value were huge wins for investors. Take for example Arconic, spun off from Howmet Aerospace in April 2020 —  15 months after the fact, their combined market cap was up 150%.

Lights, Kapur, Action! Up just 8% in the last year, Honeywell’s share price has underperformed the broader market, opening the window for Elliott to pressure the $136 billion conglomerate. Honeywell’s aerospace division, which CEO Vimal Kapur told The Wall Street Journal is “diverging more and more” from the rest of the company, was a major contributor to their conclusion that its businesses are “better separated to unleash what they have.”

It can be hard to sate investors’ appetites, but if there’s two companies who should know how to do it, it’s these two.

Novo Nordisk and Eli Lilly, the two pharmaceutical companies behind the most popular GLP-1 weight-loss drugs on the market, reported results this week. Last year, even skyrocketing sales didn’t satisfy investors, but the companies have kick-started 2025 with some zip in their Zepbound — and about time, too, because sales can’t keep ballooning forever.

Years of Plenty

Novo Nordisk reported its fourth-quarter financial results on Wednesday, revealing a 56% increase in net sales of obesity treatments such as its blockbuster drug Wegovy (the officially-for-weight-loss cousin of Ozempic, which has the same basic ingredients but is a diabetes treatment). On top of rising sales, Novo also inked a 21% increase in net profit. 

Eli Lilly’s results, published Thursday, were something of a mixed bag:

• The company’s earnings beat Wall Street estimates, but sales of its blockbuster drugs Mounjaro (for diabetes) and Zepbound (for obesity) came in ever-so-slightly under expectations.
• Eli Lilly managed to whet investors’ appetites by announcing that it would release data from a late-stage trial on its next big weight-loss drug, called retatrutide, later this year, which is earlier than expected. That won’t guarantee shareholder satisfaction long-term, however; late-stage trial data from Novo Nordisk’s next-generation drug CagriSema dinged the company’s market value by $125 billion in December.

A Spoonful of GLP-1: The next holy grail for weight-loss pharma companies is who can bring an oral pill to market, rather than having to sell weight-loss in needle form. Novo Nordisk’s CEO Lars Fruergaard Jørgensen told CNBC on Wednesday the company thinks it’s going to beat Eli Lilly to the punch. “We actually think we can compete in the US market with tablet-based treatment before Lilly can launch,” Jørgensen said. If true, that’s a bitter pill for Eli Lilly.