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Stripped of the most potent AI euphoria and beaten down by tariff anxiety, what should investors look for as a subdued Big Tech prepares to deliver earnings?
With valuations high despite a rough 2025 so far, the corporate giants still make piles of money and have kept their role as a defensive play, even as their businesses are deeply implicated in the negotiations over tariffs.
Outlooks are always important, as stock prices are based on future earnings. But this quarter's forward guidance will carry special importance as investors consider how the new levies will impact Big Tech's bottom lines. And with their outsized roles in the S&P 500, this isn't about the "Magnificents;" it's about the stock market.
If trade news means everything, even strong earnings might not mean much. But misses or suggestions of weaker quarters to come pose fresh risks. With so much policy uncertainty, there's plenty of downside to go along with the mystery. But how the tech industry fared during the pandemic could offer a rough preview of what's in store.
Obviously, this manufactured crisis is not the same, and there are plenty of differences between the supply shocks of the COVID era and those unfolding in the trade battles of the second Trump era.
Perhaps most importantly for the tech giants, the nature of the current market turmoil won’t suddenly conjure a “stay-at-home economy” that favors consumer electronics and digital communications platforms. It’s true that people have been scrambling to buy certain things (cars, iPhones). But the mad dash to get ahead of the tariffs has a different economic profile than the early days of the public health crisis.
Even without the pandemic’s unique disruptions, however, the major tech companies do have advantages, just like before.
Bigness is a moat.
One of the profound consequences of the pandemic was the consolidation of big business. Big Tech can take advantage of its size once again, leaning on enormous cash reserves, global supply chains, and diversified operations to survive the initial shock of the tariffs and a period of uncertainty as the White House irons out trade deals.
Of course, claiming a global footprint can be a liability in the middle of a battle among foreign governments. But it can also be a hedge. Apple, the poster child of the “Big Tech’s in trouble now” tariff debate, has been shipping iPhones to the US from India to skirt the tariffs on goods from China. (The White House, meanwhile, is seeking to strengthen a strategic partnership with India.)