Amid tariff storm, Wells Fargo sees this Magnificent 7 name as relative safe haven

Published 04/04/2025, 13:52
© Reuters.

Investing.com -- A sharp market sell-off driven by tariff concerns has hit technology stocks hard, with members of the so-called Magnificent 7 accounting for a large portion of the recent decline.

Yet, Wells Fargo (NYSE:WFC) says Microsoft (NASDAQ:MSFT) may be the best positioned of the group to weather the storm.

The S&P 500 dropped 4.8% on Thursday, bringing its week-to-date loss to 3.3%. Four of the largest tech names—Apple Inc (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), Amazon (NASDAQ:AMZN), and Meta Platforms Inc (NASDAQ:META)—were responsible for 41% of the decline, according to Wells Fargo. But not all members of the group are equally exposed to tariff risks.

“Our initial reaction is that MSFT is the cleanest shirt in the dirty laundry, and investors might turn to the stock to ‘ride out the storm,’” analysts led by Christopher P. Harvey commented.

Microsoft and Alphabet (NASDAQ:GOOGL) were seen as the two least exposed to the latest policy developments, with companies like Apple and Amazon facing more direct pressure. Apple’s exposure to iPhone imports and Amazon’s vulnerability to the removal of the de minimis exception are among the key risks.

Meta and Nvidia were also flagged as more heavily impacted. Meta could feel pressure through its customer base, which may be affected by trade-related policy changes, while Nvidia remains sensitive due to China and Taiwan supply chain dependencies.

Tesla (NASDAQ:TSLA), meanwhile, might ultimately emerge as a relative beneficiary once the policy picture becomes clearer, the note said.

Still, even with Microsoft’s relative resilience, the stock is not immune to broader market pressures. It fell 2.4% on Thursday and is down 9.3% since the election, although that compares favorably to other Magnificent 7 peers, such as Nvidia, which is off 27.2% in the same period.

Following the tariffs announcement, Bloomberg data shows that the likelihood of a U.S. recession in 2025, as implied by Polymarket, jumped to 51% from 42% in just one day.

This is reflected in a drop in the 10-year Treasury yield to its lowest level in six months, a 3.5% weekly decline in oil prices, and an increase in market expectations for 2025 rate cuts, which have risen to 95 basis points from 73 basis points a week ago.

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