US Tech Earnings Season Begins Amid Tariff Uncertainty, 9.2% Profit Growth Expected

The US tech stock earnings season has begun, with a focus on the outlook for the sector and the potential impact of tariff policies. The earnings season will start with Tesla on April 22nd, followed by Google and Intel on April 24th, Microsoft, Meta, and Broadcom on April 30th, and Apple and Amazon on May 1st. Nvidia will conclude the earnings season on May 28th. The outlook for major US tech companies will greatly influence the market, especially as the Trump administration's semiconductor tariff is expected to be announced soon. Analysts estimate that the details of the Trump semiconductor tariff policy will be finalized by May 7th at the latest, potentially impacting the semiconductor industry's performance in the second half of the year.

Projections for US profit growth have been revised downward, with S&P 500 earnings now estimated to rise by 9.2% in 2025, a significant decrease from the initial 14% gain projected at the start of the year. This adjustment reflects the growing uncertainties and challenges faced by the tech industry, including the potential disruption caused by tariff policies.

Key earnings reports this week include those from Alphabet and Tesla. Alphabet's focus will be on its ad revenue and cloud performance, while Tesla faces delivery challenges that could impact its financial results. The performance of these tech giants will be closely watched as indicators of the broader tech sector's health and resilience in the face of economic headwinds.

The initial shockwaves of President Trump's tariff policies are beginning to be felt, with new economic forecasts and surveys pointing to the early impacts on various sectors. The tech industry, in particular, is grappling with the potential consequences of these policies, which could affect supply chains, production costs, and consumer demand. The temporary exclusion of smartphones, laptops, and key electronics components from the new 145% reciprocal tariffs has provided some relief, but the long-term effects remain uncertain.

Investment firm Morgan Stanley has noted that electricity demand, driven by data centers, is expected to remain resilient despite potential recessions or efficiency gains. This is due to the inelasticity of data center demand, which requires a significant amount of power. While industrial demand may dip in the short term, the reshoring of manufacturing to the US is seen as a long-term tailwind for power demand. Morgan Stanley also forecasts that electricity consumption from artificial intelligence could grow tenfold by 2028, highlighting the increasing importance of AI infrastructure investments by tech giants such as Meta, Amazon, and Alphabet.

The tech sector's performance during this earnings season will be crucial in determining investor sentiment and market trends. The outlook for the sector is clouded by uncertainties surrounding tariff policies and their potential impact on the global economy. However, the resilience of data center demand and the growing importance of AI infrastructure investments provide some optimism for the tech industry's future growth. As the earnings season unfolds, investors will be closely monitoring the financial results and guidance provided by key tech companies to gauge the sector's prospects in the coming years.