Trump announces trade deal with EU following months of negotiations
Investing.com -- Bernstein analysts warned of significant uncertainty and downside risks for semiconductor stocks following former President Donald Trump’s tariff announcement, noting that while chips are currently exempt from reciprocal tariffs, indirect impacts could be severe.
"Yesterday was, of course, Liberation Day, where Trump announced his tariff plans," Bernstein wrote.
The initial news of a 10% baseline tariff was "better than expected," but markets reacted negatively as "reciprocal tariffs, if maintained, are clearly much worse than anticipated."
Although semiconductors themselves are not yet directly affected, Bernstein noted that "many of the products they go into will be."
The firm estimated that tariffs on key electronics such as "computer equipment and smartphones" could approach 40%, driven by high China exposure and combined tariffs exceeding 50% in some cases.
Additionally, foreign-made vehicles, a major consumer of semiconductor components, "will face a 25% tariff in many cases."
The analysts also pointed to broader market volatility following the tariff news, stating that "the US aftermarket is trading down 300-400 bps as a result, and we anticipate a good amount of volatility as the news gets digested."
While the semiconductor sector has avoided the worst for now, Bernstein cautioned that the primary risk remains "indirect, i.e. demand destruction, supply chain disruption, etc."
The firm admitted it was difficult to quantify the full impact, adding, "We suppose we will have to see what else comes out from the White House in the future."
Overall, Bernstein saw little optimism for the semiconductor industry in the wake of the tariff announcement, stating bluntly: "We don’t see much in the way of positive feelings here for the semi group (or frankly for anything else)."
Premarket Thursday, Nvidia (NASDAQ:NVDA) shares are down 5.9%, Qualcomm (NASDAQ:QCOM) has fallen 4.1%, Broadcom (NASDAQ:AVGO) has declined 6.3% and AMD (NASDAQ:AMD) has slipped 5%.