Since the start of Donald Trumps second term as US president, tech giants have seen their shares on the stock market tumble. To what extent is the president, who tech bosses courted during the 2024 campaign, responsible for the downturn? Although he is not the sole cause, Trumps constant policy shifts and contradictory statements have exacerbated recent market turbulence.
At US PresidentDonald Trump's inauguration ceremony on January 20, the bosses of the major US tech giants were all smiles. But nearly two months after the start of Trumps second term, the leaders of the tech giants have reasons to be gloomy.Shares in Amazon,Microsoft,Google,TeslaandMetahave all taken a big hit.
TheNasdaqComposite Index dominated byUS technology stocks slumped by over 4 percent on March 10. Since Trump took office, it has fallen by about 12 percent.Teslashares are down more than 50 percent sincetheir recent high in December. The electric car manufacturer seems to be paying a price for the close political and personal ties between its chief executive,Elon Musk, and the US president.
Amid growing public anger at the billionaires role in the Trump administration, there have been a spate ofattacks on Tesla showrooms and vehicles. Analysts say Musks involvement in politics hasalienated his customer base and investors.
The Magnificent 7's lost lustre
The so-called Magnificent 7 group of technology-sector stocks Tesla,Apple, Amazon, Alphabet, Microsoft, Meta and Nvidia had their worst day since 2022 on Monday. The sell-off hit Tesla especially hard, its shares falling by 15 percent. After underpinning a two-year rise in the US market, the tech giants on Monday dragged the broad S&P 500 stock index down 2.7 percent.
Musk, Metas bossMark ZuckerbergandJeff Bezos, founder of Amazon, had been counting on the re-election of Trump to theWhite House. Politically, they had either openly supported him to win a second termin 2024 like Musk or maintained a polite neutrality, like Bezos.
Their support seems understandable. After all, Trumps tax cuts in his first term had helped boost the profits the tech giants, and during the 2024 campaign, Trump promised to renewthetax cuts if re-elected. Meta, Google, Amazon and others are for now still waiting for Trumps second-term tax largesse.
On the international front, the president has been quick to don the armour of a trade warrior, usingtariffs, his favourite weapon, against both neighbours likeCanadaandMexicoand his main economic rival,China.
Investors initially believed that the new Trump administration would take steps to counter the potential negative effects of any trade war higher prices for goods imported to the US, tariffs imposed by other countrieson products made in America. But when Trump suggested in an interview on March 9, that a smallrecessionwas an acceptable price for the US to pay for doing big things it was a wake-up call.
Trump seems to be putting hispolitical goals ahead of the country's economic well-being, noted an analyst interviewed by the Guardian.
Anxiety-provoking uncertainty
Investors are dealing with uncertainty because of some of Donald Trumps decisions, says Daniele D'Alvia, a specialist in the banking and financial sectors at Queen Mary University of London. The US president has changed his tune on tariffs against Canada and Mexico several times in less than two months.
Read moreTrump reverses course, delaying some tariffs on Mexico and Canada amid economic fears
With regard to Europe, Donald Trump promised in mid-February to impose tariffs on imports from theEuropean Union, but then went silent on the subject.
Investors don't know where Donald Trump is going with his policies, says Christophe Dembik, investment strategy advisor at Pictet Asset Management.
"With this level of uncertainty in the US, everyone is selling off. No one wants to retain their holdings in the market because they are concerned about what can happen if there is a recession", says D'Alvia.
Shares of the leading technology companies are among the most widely held by investors, so when broad sell-offs occur, the tech giantsareamong the sectors to suffer most, notes the Financial Times.
To complicate things further, economic uncertainty leads to volatility in the markets meaning major swings in share prices. The VIX indicator, nicknamed the fear Index for US equities and which measures this volatility, has jumped 60 percent in the space of a month, which is enormous, notesDembik.
It's an ideal stock market environment for speculators. The early days of Donald Trump's second term are tailor-made for them, says D'Alvia.
In fact, speculators had begun to cool to the market since the start of January 2025.Technology stocks started to wobble at the beginning of January when hedge funds sold US equities, and tech stocks in particular, on a massive scale, says Dembik.
Analysts say speculators have launched the assault on tech stocks. Donald Trump doesn't necessarily have much to do with it," says Antoine Andrani, Director of Research for stockbroker XTB.
The Magnificent 7 have enjoyed a boom on the stock market since 2022. With the Artificial Intelligence revolution, tech has even been the main driver of stock market rises since around October 2023. But it was time for a correction, he adds.
Donald Trump, a good excuse
Investors and speculators felt that it was time to take their profits after the big gains racked up by the Magnificent 7, and put an end to the tech buying spree thathad pushed the Nasdaq index ever higher.
In January,"the Deepseek 'revolution' had a systemic effect on the Magnificient Seven and fueled speculation against Nvidia and tech shares", says D'Alvia, noting that Silicon Valley giants no longer appeared as dominant globally as previously.
Against this backdrop, Donald Trump served as a pretext to accelerate this movement. Investors decided that it was time to bring the valuations of technology companies down to more acceptable levels, says Andrani.
So, is there no reason for Microsoft, Meta and Amazon to blame Trump's chaotic policies for the slump in their shares? I think the same thing would have happened ifKamala Harrishad been elected to theWhite House, says Andrani.
The stock market storm might not, however, have been so severe. Donald Trump is probably amplifying the phenomenon over time. Without this uncertainty, the situation might already have improved for these stocks. Now it's likely to last even longer, says Dembik.
Ironically, Trump, who presents himself as a friend of the tech giants, could unwittingly do what a lot of Democrats were hoping for: topple the Magnificent 7 from their stock market pedestal.
This article has been translated from theoriginal in French.
Originally published on France24
