5 Key Considerations for Tech Investors:

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Tech stocks have faced sell-offs following the DeepSeek AI announcement and early days of Trump’s tariff announcements. While the broader market reacts negatively, there seem to be indicators that tech remains fundamentally strong, supported by secular growth drivers, solid balance sheets, and cash flow.

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  1. Direct Tariff Impact Is Low
    • Most tech sectors like semiconductors and software are exempt or minimally impacted by tariffs.
    • Companies are adapting well, with resilient supply chains

  2. Inflation and Economic Slowdown are Bigger Risks
    • Tariff-driven inflation and weakened consumer confidence could slow demand.
    • However, tech remains resilient due to ongoing needs in cybersecurity, defense, and productivity tools during downturns.

  3. Short-Term Risk vs. Long-Term Economic Risk
    • If tariffs are short-lived, effects may be minimal.
    • If prolonged, they could lead to deeper economic risk. A near-term reset in earnings could be healthy and set up tech for outperformance later.

  4. Tech & AI as National Priorities
    • Global AI initiatives will continue despite tariffs.
    • Local supply chains are being strengthened, and company spending is increasing—supporting long-term tech infrastructure growth.

  5. Tech Often Leads in Economic Recoveries
    • Historically, tech outperforms at the start of economic upturns.
    • In light of rising risks, investors should prioritize high-quality, liquid names and active management.

Is Now a Buying Opportunity?

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  • Possibly, if tariffs are rolled back or economic expectations reset.
  • Many tech stocks have become attractively valued
  • Long-term investors may find opportunities, particularly with AI still in early growth stages.
  • Despite near-term volatility and macro risks, the tech sector shows resilience and potential. 

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If you have any questions or want to learn more, you may schedule a chat with Client Solutions team here.

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