Tariff-Led Volatility Ahead for Big Tech? ETFs in Focus

The tech industry may face some ups and downs in the near term, with new tariffs expected to begin in August. Gene Munster of Deepwater Asset Management told Yahoo Finance that the delayed rollout adds uncertainty, especially for the December quarter.

NVIDIA and Apple are among tech firms temporarily shielded but still under scrutiny. NVIDIA continues to grapple with a ban on chip sales to China, while Apple faces pressure to shift manufacturing to the United States or face a potential 25% tariff.

Semiconductors in the Crosshairs

Trump has hinted at more tariffs on semiconductors — a move that could raise prices on both components and finished products, potentially hurting consumer electronics sales. According to Bob O’Donnell of TECHnalysis Research, the lack of clarity may be more damaging than the tariffs themselves, as quoted on Yahoo Finance.

Should You Fear Short-Term Volatility?

The rise of AI will keep driving the market up, as companies continue to spend heavily on technology and related areas. Tech companies are investing billions in data centers and AI chips to support the development of AI systems.

NVDA became the first company to reach a $4 trillion market cap on July 9, driving a sharp rally in the technology sector and the AI boom. Other “Magnificent Seven” stocks, Microsoft MSFT, Apple AAPL, Alphabet GOOGL, Meta Platforms META and Amazon AMZN, also rallied lately on the AI euphoria and easing tariff tensions after the April shock.

The technology sector is among the major growth drivers for the second-quarter earnings season. There was initially significant pressure on Tech sector Q2 earnings estimates, but the negative revisions trend notably stabilized in the subsequent weeks.

Long-Term Outlook: Still Strong

The global shift toward digital technology has boosted e-commerce in areas like remote work, entertainment, and shopping, making the sector stronger. The fast growth of technologies such as cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain, and 5G will keep driving this momentum, irrespective of the tariff threat.

Cybersecurity: A Growing Priority

Cybersecurity is another prominent area. Given the recent surge in the adoption of AI technology, the need for cybersecurity becomes increasingly evident. An inevitable increase in cybersecurity spending is expected, driven by rising cyberattacks and the drastic financial fallout from them. The global cybersecurity market is projected to grow at a compound annual growth rate (CAGR) of 12.9% between 2025 and 2030, according to a new study by Grand View Research.

Tech ETFs in Focus

Investors can thus play any dip noticed in the technology-based exchange-traded funds (ETFs) like Select Sector SPDR Technology ETF XLK, Vanguard Information Technology ETF VGT, VanEck Vectors Semiconductor ETF SMH, SPDR S&P Software & Services ETF XSW, First Trust NASDAQ Cybersecurity ETF CIBR and Global X Cloud Computing ETF CLOU in the near term.

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This article originally published on Zacks Investment Research (zacks.com).

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