Mag 7 Stocks Enter Bear Market: What the Trump Tariffs Mean for Big Tech

The tech sector, once the darling of Wall Street, has found itself in a bear market following President Trump's sweeping tariffs. The Magnificent Seven—Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla—have all seen their shares plummet, with some down by as much as 50% from their recent highs. The question on everyone's mind is: what does this mean for big tech?

The tariffs, which include a baseline rate of 10% on all imports and steep duties on key trading partners like China, Taiwan, and South Korea, have sent shockwaves through the tech industry. Electronics, which include smartphones, PCs, and data-center equipment, were the second-biggest imports last year at nearly $486 billion worth of goods. The increased costs could delay data-center expansion and AI adoption, setting back ambitious plans such as Stargate, the $500 billion data-center venture between ChatGPT maker OpenAI, SoftBank Group, and Oracle.

The impact on the Magnificent Seven is significant. Apple, which relies heavily on manufacturing in China, India, and Vietnam, has seen its stock fall by 26.3%. Amazon, the largest online retailer in the world, could see a major impact from the tariffs because many of its products come from places such as China. The company could also see an impact from the closing of the de-minimis loophole, which allowed goods from China valued at less than $800 to enter the U.S. without import duties. This could benefit Amazon if it reduces competition from Chinese retailers such as Temu and Shein, but these companies have also been major advertisers on Amazon’s platform.

Meta Platforms, which owns Facebook, Instagram, and WhatsApp, also earns most of its revenue from digital advertising, which could see pressure during a recession or slowdown. The company has benefited in recent years from major advertising spending on its platforms from Chinese retailers such as Temu and Shein, which could dry up as a result of the new tariff policies.

Microsoft has been a big spender on data centers to support AI build-out. These data centers could become even more expensive because many of their components come from countries that now face significantly higher costs. Nvidia, the biggest winner of the boom in AI spending, could also see an impact from tariffs. Semiconductors have long been a target of trade policy and Trump has singled out Taiwan as “stealing” the U.S. chip industry. Semiconductors were exempt from the tariffs announced on Wednesday, but a plan for targeted tariffs on chips is expected in the future, according to reports.

Tesla, the electric-vehicle maker, could also see an impact from tariffs. China announced new reciprocal tariffs of 34 percent on U.S. goods Friday, escalating the trade war with the U.S. Tesla has manufacturing plants in China, which could be affected by the new tariffs.



The current bear market triggered by tariffs presents a unique challenge for the tech sector, which has historically shown resilience and strong performance. Previous market downturns, such as the dot-com bubble burst in the early 2000s and the 2008 financial crisis, offer valuable insights into how the tech sector might navigate the current situation.

During the dot-com bubble burst, many tech companies experienced significant declines in stock prices due to overvaluation and unsustainable business models. However, the sector eventually recovered as companies focused on innovation and sustainable growth. For instance, companies like Apple and Google, which were relatively small at the time, went on to become tech giants. This recovery was driven by a shift towards more practical and profitable business models, as well as advancements in technology that created new opportunities.

Similarly, the 2008 financial crisis led to a global economic downturn, but the tech sector showed resilience. Companies like Amazon and Microsoft continued to invest in research and development, which allowed them to innovate and capture new markets. For example, Amazon's expansion into cloud computing with Amazon Web Services (AWS) and Microsoft's focus on enterprise software and cloud services helped them weather the storm and emerge stronger.

In the current bear market, the tech sector is facing challenges due to tariffs and economic uncertainty. However, there are several lessons that can be drawn from past recoveries. First, companies that focus on innovation and sustainable growth are more likely to survive and thrive. For instance, Nvidia's expansion into AI and data center networking solutions has positioned it as a leader in the semiconductor industry, despite the current market volatility. Second, companies that diversify their revenue streams and invest in new technologies are better equipped to navigate economic downturns. For example, Apple's diversification into services like Apple Music and Apple TV+ has helped it maintain profitability even as its hardware sales have been impacted by tariffs.

In conclusion, while the current bear market presents significant challenges for the tech sector, historical performance and resilience suggest that companies that focus on innovation, sustainable growth, and diversification are more likely to recover and thrive. The lessons from past recoveries, such as the importance of innovation and diversification, can guide the tech sector through the current downturn and position it for future growth.