Gap Inc (NYSE: GAP) shares plunged some 20% on Friday, rattled by concerns over tariffs and their potential impact on profit margins.

However, according to Matt Boss, a retail analyst at JPMorgan and an Extel Analyst Hall of Famer, the market is overreacting—and there’s a compelling case to buy the dip in Gap stock.

Why did Gap shares fall?

Today’s selloff in GAP shares was triggered by investor fears over an estimated $150 million in incremental tariffs hitting Gap and its brands like Old Navy.

This tariff burden has been factored into the stock price at a low double-digit multiple, equating to roughly $5 to $6 in equity value removed from the shares, Boss explained.

Despite these concerns, Gap reported solid fundamentals in its latest quarterly results, with same-store sales up mid-single digits at core Gap and low single digits at Old Navy.

The company also outlined an expected 8% to 10% multi-year bottom-line growth driven by steady sales gains.

Where the market is wrong

Matt Boss emphasized that tariffs are far from a new issue for Gap stock and its retail peers, many of whom have been aggressively reducing their exposure to China, traditionally a major source of tariff risk.

“Gap will exit this year with only 3% of its sourcing coming from China,” the JPM analyst revealed in a CNBC interview today, adding “on average, our group has a high single-digit China impact today, down from 20% in 2019.”

Retailers are mitigating tariff pressure through diversified sourcing, strategic pricing adjustments, and operational efficiencies.

Some companies are cautiously implementing low to mid-single-digit price increases, while others are waiting to see the final tariff rates before passing costs onto consumers.

JPMorgan sees opportunity

Despite recent volatility, Boss remains optimistic on Gap’s turnaround story and rates the stock as overweight.

He believes fair value lies in the mid-$30s for GAP shares, well above current prices, contingent on management’s execution of its plan.

Pullbacks like the recent selloff, he said, create compelling buying opportunities for investors willing to look beyond short-term tariff noise.

While tariffs have rattled the market, the fundamental outlook for Gap stock and other well-managed retailers remains intact.

As Matt Boss notes, investors should see the recent selloff in GAP not as a warning sign but as a buying opportunity in a sector undergoing selective, durable recovery.

Other Wall Street analysts agree with JPM’s view on GAP shares as well, given the consensus rating on the multinational clothing and accessories retailer currently sits at “overweight”.

Analysts have an average price target of a little over $27 on Gap Inc, which indicates potential for a more than 20% upside from current levels.

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Elon Musk is diving back into his companies, declaring a renewed, round-the-clock focus on Tesla, SpaceX and his AI venture xAI, just as each prepares for high-stakes moves that could shape their futures.

On Wednesday evening, Musk announced he was stepping away from his role at the Department of Government Efficiency (DOGE), a four-month initiative aimed at cutting federal spending by up to $2 trillion—a target that has so far seen only modest progress.

“Back to spending 24/7 at work and sleeping in conference/server/factory rooms,” the billionaire wrote on X last Saturday.

The pivot comes at a time of mounting operational and reputational challenges for Musk’s empire.

While some conservative policymakers continue to view Musk’s involvement as a symbolic victory for budget hawks, others in the business world, including Musk, have acknowledged that his political engagements have hurt his businesses.

From Tesla’s sliding sales to SpaceX’s Mars ambitions and the AI arms race heating up against OpenAI and others, the workload is immense — and the stakes are higher than ever.

At Tesla, Robotaxi launch, falling Europe sales a priority

At Tesla, Musk’s renewed involvement comes as the company nears the launch of its long-promised robotaxi service in Austin, Texas.

The service is expected to debut next month, and Musk recently highlighted road tests of self-driving Model Y vehicles operating without anyone in the driver’s seat, stating there had been “no incidents.”

Tesla is betting heavily on autonomy to counteract falling sales and eroding market share.

In the US and Europe, Tesla deliveries have slumped in recent months, with European sales declining for a fourth straight month in April.

For the first time, Chinese rival BYD overtook Tesla in sales.

While Tesla remains the largest EV maker in the US, investor confidence has wavered, not least because of Musk’s increasingly political profile.

His role in the DOGE, and $300 million in Republican campaign donations have fuelled buyer backlash and added volatility to Tesla’s stock.

During Musk’s absence this spring, the Tesla board reportedly initiated informal talks with executive search firms to plan for potential CEO succession, though the company has denied any formal search process.

Tesla chair Robyn Denholm said the board remains confident in Musk’s leadership and emphasized a renewed focus on the company’s “exciting growth plan.”

Investors have reacted positively to Musk’s return.

Tesla’s market capitalization, which had plummeted after Trump’s election and Musk’s increasing political involvement, has rebounded above $1 trillion on the news.

SpaceX pursues Mars as setbacks mount

Musk’s other major undertaking, SpaceX, is trying to prepare for what could be its most ambitious mission yet: a Mars-bound test of its Starship spacecraft in 2026.

That year presents a rare orbital opportunity, when Earth and Mars will be at their closest.

But serious technical challenges persist.

Earlier this year, two Starship prototypes exploded in flight.

The most recent test flight failed to deliver on a critical objective: testing the spacecraft’s heat-protective tiles during atmospheric reentry.

SpaceX lost contact with the vehicle before the tile system could be assessed.

Despite setbacks, SpaceX retains strong government ties.

Its partially reusable Falcon rockets continue to carry out missions for NASA and the Pentagon.

On Friday, SpaceX is scheduled to launch a GPS satellite for the US military.

The company’s Starlink satellite internet network, with over 7,500 satellites in orbit, has become another vital business line — one that has earned it increasing favour from US intelligence agencies.

Intense rivalry between xAI and OpenAI another frontier

Musk’s attention is also shifting toward artificial intelligence, a field he has long warned could pose existential risks.

His AI startup, xAI, recently merged with X (formerly Twitter) in a bid to pool resources and accelerate the development of artificial general intelligence — what he calls “digital superintelligence.”

The combined entity has introduced Grok, a chatbot that Musk claims will surpass competitors.

The company is working on high-profile partnerships to extend Grok’s reach, including a potential collaboration with Microsoft.

However, efforts to secure a place in a major Middle East AI deal were unsuccessful, The Wall Street Journal reported.

Musk’s return to xAI signals a sharpening rivalry with former partners at OpenAI, which he co-founded but later criticized for being too aligned with corporate interests.

Neuralink and Boring Company progress slowly

Beyond Musk’s primary focus areas, his other ventures are making slow but notable progress.

Neuralink, now led by Shivon Zilis, is entering a new phase of clinical testing in the Middle East aimed at patients with motor and speech impairments.

The brain-implant startup has already implanted chips in at least three paralyzed patients who can now interact with computers using their thoughts alone.

Meanwhile, The Boring Company, under longtime Musk deputy Steve Davis, is working on a proposed 68-mile tunnel system in Las Vegas.

While the company has been unable to break ground on major projects elsewhere, the Las Vegas system is gradually expanding.

Davis, like Musk, also stepped down from DOGE this week.

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Anticipation is building in the oil market as the OPEC+ meeting approaches, with a production decision expected over the weekend. 

The eight cartel members who previously implemented voluntary production cuts are now contemplating a substantial rollback of these cuts in July. 

The eight members of the Organization of Petroleum Exporting Countries and allies, including kingpin Saudi Arabia and Russia, had previously agreed to increase oil production by over 400,000 barrels daily in May and June. 

“Markets are currently influenced by headlines, but they are truly awaiting a clear signal from the fundamentals,” Mukesh Sahdev, global head of commodities market, oil at Ryatad Energy, said in an email.

“Even when factoring in potential downside risks, the numbers we’re seeing suggest there’s space for additional OPEC+ output in July,” he added.

This is further noted in the Brent futures curve, which remains in backwardation through October 2025. 

Strength in prices

Oil prices have firmed over the last few sessions, albeit thinner trading earlier this week due to public holidays in the US and UK. 

“The strength is likely due to relief that the threat of new US tariffs against the EU has been postponed for the time being,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said. 

However, many uncertainties remain, especially with regard to (US) sanctions policy.

On the one hand, there are the nuclear negotiations between the US and Iran.

Although these were so far inconclusive, both sides remained optimistic after the fifth round of talks and want to meet again in the near future.

A possible easing of sanctions against Iran therefore remains on the table.

On the other hand, despite a downturn in relations between Russian President Putin and US President Donald Trump, triggered by Moscow’s extensive attacks on Ukraine, Trump has stated he will “absolutely consider” implementing new sanctions against Russia. 

Conversely, Russia appears intent on minimising the significance of Trump’s response.

“Chart-wise, crude oil has been in a downtrend ever since prices peaked in March 2022, soon after Russia invaded Ukraine,” said David Morrison, senior market analyst at Trade Nation. 

But that doesn’t mean that prices can’t spike sharply in either direction.

Summer demand supports OPEC output increases

According to analysts and experts, oil demand rises sharply during the summer months from May to August. 

This presents a suitable opportunity for OPEC+ to increase oil production without flooding the market. 

Liquids demand growth this summer is being driven by Europe and the Middle East, rather than Asia or North America.

Supply-side growth is primarily driven by Saudi Arabia, the US, Canada, and Brazil. However, Canada’s output faces wildfire risks, and Brazil’s may see softer demand due to alternative supplies.

Global liquids demand is projected to grow by only 700,000 barrels per day in 2025, according to Rystad Energy’s calculations.

However, fundamentals from May to August are supportive, with demand growth outpacing supply growth by 600,000-700,000 barrels per day, the Norway-based energy intelligence company said.

Additionally, crude and condensate demand is projected to exceed supply by over 1 million barrels daily for the indicated timeframe, Rystad noted. This assessment precedes the upcoming OPEC+ meeting this Saturday.

Refinery demand growth and supply

Globally, increased crude demand for refineries is anticipated from Asia, North America, Europe, and Russia.

Russian refinery operations may become especially important as tightening sanctions on its crude exports could lead to an increase in domestic refining.

“Overall, oil market uncertainty is likely to prompt many countries to maximize refinery runs and build product inventories, especially as stock levels remain low across regions,” Sahdev said. 

Challenges already plague US crude oil production, and the earlier narrative of a significant increase in drilling activity has faded.

With the West Texas Intermediate crude oil, the benchmark price for US oil, hovering around $60 per barrel, producers are unlikely to expand drilling activities, experts said. 

Output declines elsewhere

From May to August, output reductions are anticipated for Kazakhstan and other OPEC+ participants. This situation will allow the eight OPEC+ nations to reactivate some of their previously offline supply.

To bolster refinery margins, Saudi Arabia might provide crude oil at reduced prices for July.

Strong product margins continue to support high levels of refinery operation. 

Furthermore, the recovery of high sulfur fuel oil margins into profitable territory provides an incentive for less complex refineries to also increase their processing rates.

“In this environment, driven by public narratives and differing opinions, OPEC+ has an opportunity to increase supply modestly in July,” Sahdev said.

However, beyond August into September, this window could close, and any further increase would likely depend on supply disruptions elsewhere in the market.

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