Understanding tariffs and market shifts: Insights from Denise Chisholm - November 6, 2025

Tariff uncertainty: Planning amid policy shifts

Chisholm addressed the ongoing Supreme Court case evaluating the legality of current U.S. tariffs. While the outcome remains uncertain, historical precedent suggests that not all tariffs will remain intact. Some may be modified or partially rebated, though a complete rollback is unlikely.

Importantly, she noted that the administration has alternative avenues to implement tariffs, such as Section 282 provisions tied to national security. For businesses, this means planning around a more structured and potentially predictable tariff environment, one that could reduce uncertainty and support investment decisions.

Capital expenditure: A different cycle than the dot-com era

Today’s capital expenditure (CapEx) cycle is notably different from the late 1990s. Chisholm emphasized that while CapEx is rising, particularly in areas like AI infrastructure and data centers, it remains below free cash flow levels. This contrasts with the dot-com bubble, when companies were spending well beyond their means.

From a broader market perspective, CapEx growth relative to sales is historically correlated with future GDP and earnings growth. Investment trends may potentially influence long-term economic expansion, but it's important to consider that outcomes can vary by sector and company.

Technology sector: balancing investment and profitability

Unlike the dot-com era, where tech sector profitability declined ahead of the bust, today’s technology companies are showing expanding operating margins alongside increased investment. Chisholm pointed out that median earnings in the sector have been rising, supported by strong demand and prudent capital allocation.

While future returns on infrastructure investments like data centers are still unfolding, the fact that companies have the financial capacity to invest, without overleveraging, is a key differentiator. This positions the sector as a potential source of durable growth, though investors should remain selective and diversified.

Market corrections: volatility as a normal feature

Chisholm reminded viewers that market corrections between 5% and 15% occur in most years and are often followed by positive returns. Rather than viewing volatility as a warning sign, she suggested it can present opportunities, especially when earnings growth remains visible.

She also noted that corrections tend to be less persistent when supported by strong fundamentals. With median earnings now inflecting after a multi-year contraction, the broader market may be entering a more resilient phase.

Sector evolution: staying flexible in a shifting landscape

Technology’s integration into other sectors, such as communication services and fintech, is reshaping traditional boundaries. Chisholm encouraged investors to remain flexible and consider both active management and targeted sector exposure to navigate these shifts.

She emphasized the importance of historical data in evaluating sector dynamics, noting that divergences within sectors can signal fundamental changes. For example, consumer staples, once considered growth-oriented in the 1980s, now reflect different characteristics in today’s cycle.

Final thoughts