The tech-dominant Nasdaq index witnessed a downturn on Monday as investors across the global market tried to fathom the impact of President Trump’s aggressive tariff policies on the ‘Magnificent Seven’ tech behemoths due to disclose their earnings this week. Investors across the board are watchful for any indications that tariffs might be causing bottlenecks in the supply chain and may be dampening the demand for Apple’s premium iPhones and MacBooks. The earnings report due on Wednesday is much anticipated. According to reports, the tech giant, based out of Cupertino, California, is strategizing to move the majority of its production to India by 2026 to minimize the risks associated with China.
In the interim, the attention of market watchers will be directed towards other tech giants – Microsoft and Meta, set for their reports on Wednesday, and Amazon expected to announce on Thursday. Particularly of interest will be whether these tech powerhouses plan to invest billions of dollars into the rapidly evolving race of artificial intelligence in this era of economic volatility. The Nasdaq index, weighed heavily with tech stocks, experienced a slump of as much 243 points during Monday’s trading, most recently seeing a slight 0.2% decline at a total of 17,342.71.
The current week is also significant as it promises the release of crucial economic data that might point towards the efficacy of Trump’s stern trade policies. Analysts await Wednesday’s announcement of the Fed’s preferred inflation measure and the jobs report due on Friday. There has been significant pressure on the shares of these tech companies since the start of the year due to apprehensions that Trump’s duties – which include levies as high as 145% on Chinese imports – may have led to issues in the supply chain whilst causing an increase in consumer prices.
The preliminary quarterly results from these ‘Mag 7’ companies have already demonstrated a mixed bag of outcomes last week. Alphabet, the parent company of Google, saw an uptick in its stock after the company reported revenues and profits better than forecasted, crediting these positive results to recent achievements in their AI strategy. Contrastingly, Tesla’s market shares took a hit after the company reported disappointingly low first quarter results, which incorporated a steep 71% drop in net income.
Further clouding the future outlook of the tech sector, reports have emerged that Huawei, the Chinese tech colossus, is in the process of building an AI computer chip, a move that could directly challenge Nvidia’s hardware offerings. As a consequence, Nvidia’s shares took a hit, declining almost 4% upon surfacing of the news. Earlier this year, the news of significant investments in AI technologies by tech giants was well received on Wall Street, despite the emergence of China’s DeepSeek, which claimed to have developed an advanced AI model at a relatively lesser cost than what American companies had expended on similar projects.
The key question that looms large is whether further announcements hinting at these steep investments in AI will be considered positively, given the fears of economic slowdown and the potential advent of recession triggered by the tariff disputes initiated by President Trump. However, it might be premature to predict any concrete outcomes given the complex and volatile nature of the global economic and political landscape interlaced with the disruptive potential that emerging technologies like AI promise.