chip stocks face tariff headwinds as analysts sound alarm
New York, Monday, 7 April 2025.
Analysts are cautioning about potential risks to chip stocks, including ASML, amidst the escalating tariff war. Rosenblatt estimates Apple could face nearly $40 billion in tariff costs due to its reliance on manufacturing in China and Vietnam. Bernstein analysts highlight that while semiconductors might be spared direct tariffs, downstream products like computers and smartphones could face duties nearing 40%, triggering market volatility.
Analyst downgrades and target price cuts
Mizuho has downgraded ASML from “buy” to “neutral,” citing potential downside risks to the company’s business outlook for 2026 [2]. The investment bank also lowered its price target for ASML from €810 to €650 [2]. This downgrade reflects concerns about increasing customer concentration, particularly with Taiwan Semiconductor Manufacturing (TSMC), which could lead to increased volatility [2]. Mizuho anticipates a 3% year-over-year decline in ASML’s sales for 2026, with earnings per share remaining flat [2].
Impact on apple and its supply chain
Rosenblatt analysts suggest that if Apple were to fully absorb the tariff costs, it could face a 32% year-over-year decrease in operating profits and earnings per share [2]. The firm estimates that Apple would need to raise device prices by approximately 40% to offset the tariff costs entirely, a move that could significantly dampen demand [2]. Bernstein analysts also noted the potential for a 300 to 400 basis point drop in the U.S. after-hours market due to the announced tariffs, indicating significant market apprehension [2].
broader market and industry response
The primary concern within the semiconductor industry revolves around the indirect impacts of tariffs, including potential disruptions to demand and supply chains [2]. Several Chinese electronic and semiconductor companies indicate that the direct impact of U.S. tariffs on their businesses is currently minimal [3]. This is partly because a small percentage of their revenue comes from products delivered directly to the U.S [3]. These companies plan to accelerate new product development and enhance product value to maintain competitiveness amidst global uncertainties [3].
potential scenarios and expert opinions
Market commentator Jim Cramer has drawn parallels to the 1987 stock market crash, cautioning about potential significant declines if trade issues are not resolved [1]. Hedge fund manager Bill Ackman suggests the possibility of a tariff postponement announcement from President Trump to allow more time for negotiations [1]. Former JP Morgan chief strategist Marko Kolanovic believes that the near-term risk is skewed towards an upside squeeze, given the market’s sensitivity to President Trump’s decisions [1].