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As Microsoft celebrates its 50th anniversary Friday with a Seattle event spotlighting its latest AI developments, investors are likely breathing a sigh of relief: the company’s stock has weathered the tariff tidal wave far better than its peers. Among the so-called Magnificent 7 cohort of tech companies, Microsoft shares have experienced the smallest decline since Trump's global tariff announcement Thursday, with some analysts pointing to its cloud computing offerings, and its broad base of enterprise customers, as being more protected from the worst impacts of the tariffs.
Microsoft's stock price is down roughly 5.8% from its closing price on Wednesday, the evening of the tariff announcement. By contrast, Meta, Apple, Amazon, Nvidia, and Tesla have all suffered double-digit percentage declines, plunging between 10% and 16% and erasing tens of billions of dollars in market value. Only Google-parent company Alphabet has fared almost as well as Microsoft among the Mag 7, with shares selling off 7% over the past two days.
Analysts told Fortune that Microsoft has an edge because it doesn’t deal much in physical or consumer products—so it has less direct exposure to tariffs. What's more, Microsoft's focus on enterprise customers means that a big portion of its revenue streams are tied to long-term contracts, giving Microsoft extra stability. In Microsoft's fiscal year 2024, its cloud segment, which includes Azure, was the company's largest revenue contributor, generating about 43% of the company’s total revenue.
The companies that have low exposure to tariffs and higher enterprise revenue mix will likely be "safe havens,” Daniel Newman, CEO of analyst firm The Futurum Group, told Fortune. "Microsoft is among the best."
Rishi Jaluria, managing director, software equity research at RBC Capital Markets, pointed out that Microsoft is not immune to tariffs, but it should be generally well-positioned. "The largest piece of their business is enterprise software, where they're selling cloud applications and infrastructure to corporate customers,” he said. “Even if there were reciprocal tariffs, I don't know how you would tariff proper software services."
Apple, on the other hand, would be heavily impacted by the tariffs if, say, iPhones become very expensive and the U.S. economy slips into a recession, said Patrick Moorhead, founder and chief analyst at Moor Insights and Strategy. Meanwhile, he said, “Amazon buys most of its products from China. Big tariff risk.”
Microsoft, whose main hardware products are the xBox gaming console and various laptop models, sells “so few products that it isn’t spelled out in detail on their income statement,” he added.