Investors of all stripes are asking themselves one question: “Will he or won’t he?” He being President Donald Trump and tariffs on imports being what he’s promised he will impose.

And the stakes could hardly be larger for General Motors, which tried to assuage the uncertainty Tuesday with a simple message: We have a plan and the future is bright. Investors weren’t immediately buying it: Shares in America’s largest US automaker, one of the first major corporations to sketch out a potential post-tariff path, fell 8.9% in the company’s worst day since 2020.

Ready to Shift Gears

But the fact is, Detroit-based GM has been on a roll of late, thanks to strong SUV and pickup truck sales. Executives announced Tuesday that profit in 2024, excluding one-time charges, climbed 21% to $14.9 billion, a record. The company sold 2.7 million vehicles in the US last year, the most since 2019. GM also predicted $11.2 billion to $12.5 billion in net income for 2025, ahead of analyst expectations.

That’s a nice position to be in, if not for certain world events. President Trump, as you’ve heard a million times now, is mulling placing 25% tariffs on imports from Canada and Mexico. And GM happens to produce roughly a third of the US vehicles it sells in those two countries, leaving its business exposed and investors wary of its shares, at least on Tuesday:

• Chief Executive Mary Barra tried to pacify concerns Tuesday by noting the company has “several levers that we can pull,” including factory space in the US where it can shift the production of some pickup trucks. Barra also said GM might accelerate shipments of vehicles from Canada and Mexico to get ahead of tariffs, creating some breathing room as it realigns production at home.
• One thing GM will not do is anything that involves deploying a major amount of capital without clarity, Barra said, noting no tariff policy has been announced. The Financial Times reported Monday that newly confirmed Treasury Secretary Scott Bessent would prefer to introduce tariffs gradually, starting with a much lower 2.5% levy.

The selloff in GM may well have been triggered by a perfect storm of political fears and a one-time $4 billion restructuring charge related to its struggling China business, which helped put the company $2.9 billion in the red in the fourth quarter. The bottom line: Businesses with exposure to tariffs should expect a degree of skepticism from investors, even if they have an “extensive playbook” they’re ready to run, as GM’s CFO Paul Jacobson said Monday.

Electric Gravyland: While electric vehicle sales have slowed, GM has nearly doubled its EV market share in the US to 12.5% since the first quarter of 2024. More importantly, after losing billions on EVs to scale up operations and build out a fleet, GM’s EV sales covered the cost of materials and labor for the first time in the fourth quarter, a key milestone toward profitability. Of course, that was all before a certain other policy change from the White House…

Just one day after flipping out about a scary good cheap AI app conjured by a Hangzhou startup, Silicon Valley is saying DeepSeek is going to make us all better.

DeepSeeking the Truth

Make no mistake: DeepSeek’s impressive debut made a splash for a reason. But experts told The Daily Upside the model’s arrival is more likely to trigger industry right-sizing and price-culling than to represent an extinction-level event for competing US firms. And, perhaps most importantly, even with DeepSeek’s considerable efficiency gains, compute power is still the industry’s most important metric. It’s likely why Nvidia’s share price rebounded nearly 9% on Tuesday after suffering the biggest single-day loss in US history on Monday. Overall, the tech-heavy Nasdaq Composite index climbed over 2% Tuesday after falling 3% on Monday.

Firms such as OpenAI and Anthropic that have poured billions of dollars and vast amounts of resources into building foundational AI models are having a bad week, along with a bunch of all-in VCs. But just about every other player in (or adjacent to) the AI space is seeing opportunity:

• “The narrative over the last couple months has been that AI is only good for the top-tier VCs that can write [massive] checks, and the mid-tier VCs are getting left in the dust,” Wil Schroter, founder and CEO of Startups.com, told The Daily Upside. “Now, all of a sudden, all these mid-tier VCs with smaller checks matter a whole lot more.”
• Meanwhile, The Information reported Tuesday that many firms that had been using models from competitors like OpenAI have quickly pivoted to DeepSeek’s far-cheaper model, reducing AI spend costs by as much as 66% in the process.

The Big Short-Sightedness: For AI developers, DeepSeek’s arrival — and its open-source nature and willingness to share its research — offers a new foundation to build on. Which is why some tech leaders see the moment as less Sputnik and more akin to Google spilling the secrets of its distributive algorithms to the world way back in 2004. Schroter also cautions against the “short-sightedness” of declaring DeepSeek as the ultimate AI winner, adding “they just made gas 10 cents a gallon. Now everybody can do stuff, way more than they could do five minutes ago.”

Don’t say I never did anything for you.

On Tuesday, Spotify put out a press statement saying that its collective payments to the music industry for 2024 totaled $10 billion. According to Spotify, that’s one sixth of the amount it’s paid to the industry since it was founded in 2006. It’s part of an effort on Spotify’s part to look like the music industry’s best friend, but just what does $10 billion get you these days?

If I Had $10 Billion (I’d Buy Your Love)

In many musicians’ and consumers’ minds, Spotify and its fellow streamers have taken on the mantle of “The Man” in the industry. Music streaming services, like TV streaming, have gone up in price, but they’re still a pretty startling value proposition when you think of the amount of music you get for a subscription.

Tatiana Cirisano, senior music industry analyst at MIDiA Research, told The Daily Upside that Spotify’s $10 billion figure doesn’t just tell you how much Spotify is paying, but also just how dependent the music industry is on the streaming giant:

• “Labels counted just under $22 billion in global music streaming revenue in 2023, which represented more than 60% of their total revenue that year,” said Cirisano, citing MIDiA’s industry data. She added that Spotify is, unsurprisingly, the top contributor to that number.
• However, that doesn’t mean Spotify is necessarily in a one-horse race. In 2022, YouTube Music said it had paid the music industry $6 billion, and Global Head of Music Lyor Cohen said publicly he wants YouTube Music to become the top revenue source for the sector by 2025.

Fanning the Flames: Spotify’s announcement on Tuesday that it’s shelling out more dough to the music industry than ever before comes on the heels of a new licensing agreement with Universal Music Group, the world’s biggest music label. Both parties touted the deal as ushering in the “next era of streaming innovation.” So far, the details are scarce. One thing the new deal may lead to is more stratified subscription tiers, including a “superfan” tier which could give subscribers early access to perks like new music, Q&As with artists, and better audio.