US Tech Sector Faces Decade-Long Setback Amidst Trump's Tariff Turmoil Says Analyst

The U.S. technology sector is facing unprecedented challenges in the wake of tariff policies introduced by the Trump administration. Dan Ives, a senior analyst at Wedbush Securities, expressed concern over possibly the most daunting period in his 25-year career. He stated that these tariffs might set the U.S. technology sector back by a decade.

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Traditionally optimistic about U.S. tech stocks, Ives now adopts a notably pessimistic outlook. He highlights the high-risk nature of current economic strategies, likening them to a dangerous poker game that could impact capital expenditure and major procurement. The momentum of this situation is likened to a rolling snowball, gathering size as it descends.

From discussions with hundreds of investors, Ives predicts that the U.S. tech sector will see an automatic halt to around 15-20% of projects and capital expenditures. The notion of manufacturing iPhones domestically is difficult and costly, a sentiment echoed by Ives who points out the severe practicality challenges facing tech giants like apple.

He specifically notes that Apple's production mostly occurs in China, with India contributing a mere 3% of iPhone manufacturing. The logistics and financial implications of shifting Apple’s production to the U.S. are immense, involving potential expenses of $30 billion over three years just to migrate 10% of output.

China's tech giants, he suggests, might emerge as unexpected beneficiaries of these trade conflicts. Companies such as alibaba and jd.com, as well as BYD and Huawei, could find themselves strategically advantaged due to their access to essential materials and capabilities that the U.S. lacks domestically.

Comparing this situation with past crises like the Internet bubble, the financial crash, and the COVID-19 pandemic, Ives asserts the current moment as uniquely perilous. Amidst this outlook, Ives advises investors to pivot toward defensive tech stocks, favoring firms like Microsoft and Meta over Nvidia and Apple, given their lower exposure to tariff risks.

Software and cybersecurity sectors are earmarked as defensive segments, encouraging clients to move away from semiconductor stocks toward U.S. software and cybersecurity equities. Despite Nvidia's significant stock price downturn, Ives argues its profit growth forecasts remain excessively optimistic.

He maintains caution on Google's long-term prospects, emphasizing the need for breakthroughs in AI to sustain growth. Although Meta could exhibit resilience in advertising, its investments in the metaverse might encounter market challenges. Amazon's retail division faces hurdles, yet its cloud computing business, AWS, stands out as a positive aspect.

Interestingly, Ives's view on Tesla is notably grim, departing from his usual optimism. He perceives serious brand damage and ongoing declines in market share as formidable challenges for the electric vehicle manufacturer.