Breakfast News: China's Tough Stance

Breakfast News: China’s Tough Stance

April 24, 2025

1. China Calls for Tariff Withdrawal

Chinese government officials have demanded that the U.S. revokes all unilateral tariffs and want to see steps taken before agreeing to any trade talks, in a continuation of a tough negotiation stance.

• “Any reports on developments in talks are groundless”: He Yadong of the Ministry of Commerce countered positive comments from President Trump earlier this week regarding talks, with China wanting to be shown more respect before looking to engage.
• Defense ministry weighs in: A spokesperson for the department added some individuals in the U.S. had a biased view on bilateral ties and any perceived military threat, which is hindering engagement between the two sides.

2. ServiceNow Enjoys AI Boost

ServiceNow (NOW 6.34%) jumped over 10% after the market closed thanks to beating its own outlook for both revenue and earnings. The recent heavy investment in AI is paying off, with agentic AI capabilities a factor in both retaining existing clients and winning new ones.

• More than 500 customers now spend at least $5 million annually: The company delivered a 19% year-over-year growth in subscription revenue, providing a positive outlook for it to increase by 19.5% for Q2.
• “We are at the forefront of the AI opportunity to drive even greater value for our customers”: New partnerships were announced with Aptiv (APTV 2.14%), Vodafone (VOD -2.98%), and Devoteam, which are focused on improving data and CRM services, as well as expanding AI agent deployment. This should help to enable faster growth by leveraging other companies’ skillsets.

3. Chipotle Battles Consumer Caution

Chipotle (CMG 3.61%) dipped as much as 5% in after-hours trading after results showed customers reducing restaurant visits, with comparable store sales falling for the first time in more than four years.

• “We began to see that elevated level of uncertainty felt by consumers”: CEO Scott Boatwright explained customers were trying to save money because of concerns around the economy, a trend that has persisted into April.
• Costs becoming a rising share of total revenue: Food, beverage, and packaging costs for Q1 were 29.2% of revenue, up from 28.8% last year. Labor costs rose from 24.4% to 25%.

4. Top Epic Movers

Rule Breakers recommendation ResMed (RMD 0.33%) provided strong revenue growth alongside profit margin expansion and a double-digit percentage earnings increase in the fiscal Q3 report. This sent the stock up over 6% after the market had closed.

• “Very unprecedented dynamic of uncertainty”: Hidden Gems rec IBM (IBM 2.08%) dropped almost 7% in after-hours trading following underwhelming quarterly results detailing how 15 U.S. government contracts were shelved with new cost-cutting drives.
• Foolish stocks moving higher: Tyler Technologies (TYL 0.96%) beat consensus earnings per share figures for a fourth straight quarter, sending the Stock Advisor rec up over 6% after the closing bell. Dividend Investor recommendation Whirlpool (WHR 0.53%) also jumped after hours, almost 4%, despite missing analyst expectations.

5. Next Up: Earnings Ahead

Alphabet (GOOG 2.63%) will release earnings after the market closes, with investors paying close attention to the AI integration of Gemini across products. Numbers for Google Cloud will be scrutinized, as well as news on any fresh enterprise wins.

• Beating the S&P 500 by 53% since 2020 recommendation: Hidden Gems rec Kinsale Capital (KNSL 0.74%) results should show a bounceback after the hurricane-induced hit from last quarter. Focus will be on the outlook for maintaining underwriting discipline along with any progress on using tech to streamline operations.
• A good barometer for the U.S. consumer: Before the market opens, Proctor & Gamble (PG -1.27%) reports, with revenue expected to be flat year over year. Shareholders will be keen to see how resilient client demand has been.

6. Foolish Fun

Alphabet dominates online search and cloud computing. Yet there are no sure things in business – the rise of AI chatbots threatens to change how people search the internet for instance. If you were the CEO of Alphabet for a day, what’s one thing you would do to improve the business? Discuss with friends and family, or become a member to hear what your fellow Fools are saying!