American Eagle tumbles after BofA says Sydney Sweeney boost won’t beat tariffs

Analysts say the buzzy mall retailer’s pricing power is limited as tariffs add pressure to both AE and Aerie.

8/25/25 10:04AM

American Eagle shares slid as much as 4% Monday after Bank of America downgraded the stock to “underperform” (sell) from “neutral” and cut its price target to $10 from $11 — or about 22% below Friday’s close.

The downgrade comes despite a buzzy campaign with actress Sydney Sweeney that helped drive AE shares up 18% in August. Analysts said the splash may have supported near-term sales momentum, but doubted it would be enough to spark a long-term turnaround.

The bigger issue: tariffs. Analysts warned that AE and Aerie have limited pricing power, making it hard to offset new costs. Management has already said tariffs would cut fiscal 2025 gross profit by roughly $40 million, or 150 basis points, even after mitigation. Bank of America estimates that an additional 20% tariff on goods from the rest of the world would pile on another 20 to 70 basis points of margin pressure over the next two years.

Competition is also heating up: rival Gap recently launched its “Better in Denim” campaign with girl group Katseye, which the retailer says has become its most viral ad ever, resonating strongly with younger shoppers who value diversity and inclusion.

American Eagle is down 27% year to date, with the company poised to report earnings next week.

Luke Kawa8h

Google jumps, Nvidia and AMD fall on report that the search giant is in talks to sell “billions of dollars” of its custom AI chips to Meta

Google jumped in after-hours trading while Nvidia and Advanced Micro Devices dropped on the heels of a report from The Information that has the search giant muscling in on the chip designers’ turf.

Per the report, Meta is in discussions with Google to spend “billions of dollars” to use its AI chips in the social media company’s data centers starting in 2027, and to begin renting access to Google chips from its cloud business next year.

Historically, Google has rented access to these chips through its cloud business rather than supply them directly to third parties. The report suggests that insiders believe a more direct foray could allow the company to grab a market share in chips amounting to about 10% of Nvidia’s annual revenue.

Google’s AI chips — TPUs, or tensor processing units — are having a moment. These semiconductors were used to train its latest genAI model, Gemini 3, which has received rave reviews, and are cheaper to use than Nvidia’s offerings. That’s sent the stock to record highs, surpassing Microsoft in market value along the way.

According to The Information, Meta is even mulling using TPUs for training, considered a much more demanding task, rather than just inference alone.

Shares of Nvidia and AMD, which sell GPUs for use in data centers, fell about 2% in postmarket trading, while Google gained around 2%.

During Nvidia’s conference call last week, CEO Jensen Huang was asked about the competitive threat posed by custom chips. He responded by talking up the difficulty of inference (“How could thinking be easy?”). That’s a not-too-subtle nod to the idea that his company’s GPUs will be the more effective solution compared to more cost-effective options. He also touted the company’s CUDA software as a selling point, because it’s more commonly used and therefore makes it easier for its buyers to go on and sell AI computing capacity.

Google has aimed to make its JAX software easier for developers over time by making its TPUs operable via open-source software tied to PyTorch (invented by Meta), overhauling how errors are reported, and introducing an extension that makes it easier to write custom code, among others.

Tasha Matsumoto

12h

Tech rally drives stocks higher as AI trade is back on

Stocks kicked off the holiday week with a tech-fueled rally, led by Broadcom.