Trump's "Reciprocal Tariffs": Why Major AI Stocks Apple, Meta, and Alphabet (Google) Are Feeling the Heat Today

The whole U.S. stock market is feeling the pain from the sweeping new tariffs that President Trump announced Wednesday after the market closed. As of 1:10 p.m. ET Thursday, the blue chip Dow Jones Industrial Average had fallen by over 1,300 points (3.1%), the broad market S&P 500 was off by 3.9%, and the tech-heavy Nasdaq Composite was down by 4.9%.

At that time, shares of Apple (NASDAQ: AAPL) traded more than 8% lower, Meta Platforms (NASDAQ: META) was down more than 6%, and shares of Alphabet (NASDAQ: GOOGL) were off by more than 3%.

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Apple could really feel the impact

At his press conference, Trump announced sweeping tariffs on nearly every nation, starting from a minimum base rate of 10% and rising -- sometimes markedly -- from there. To determine what level of tariff to impose, Trump took each country's trade surplus with the U.S., then divided that by its total exports to the U.S. The resulting percentage, he asserts, is the "tariff" that country imposes on U.S. goods. Trump's new "reciprocal tariffs" on goods being imported from that country will be set at half that level. But even countries that import more from the U.S. than they export to it will be hit with 10% tariffs.

For instance, by that calculation, China is imposing hidden tariffs of 67% on U.S. imports, meaning the new tariff on Chinese imports will be 34%.

Many economists and experts have argued against the validity of these calculations.

Regardless, goods coming in from the United States' key trading partners now face steep tariffs, including some that might have caught the market by surprise, such as Vietnam and Cambodia, which are looking at 46% and 49% tariffs, respectively.

Investors are clearly concerned about the impact tariffs might have on Apple, which at one point on Thursday was having its worst trading day in five years. Bank of America analyst Wamsi Mohan on Thursday morning cut his price target on Apple from $265 to $250, though he maintained his buy rating on the stock.

However, Mohan acknowledged some of the risks the company may face, saying that all Apple products could be subject to tariffs. If this ends up being the case, it could cut the tech giant's profits by $20 billion, shrink its gross margins by 5 percentage points, and ultimately result in an estimated earnings hit of $1.24 per share in 2026. Mohan also estimated that it would cost 20% more to manufacture iPhones in the U.S. than it costs to manufacture them in China.

Still, Mohan said that it could be worse considering the magnitude of the tariffs, and he also thinks Apple has some flexibility to maneuver, whether by raising prices, streamlining its supply chain, or perhaps pursuing exemptions.

Meanwhile, companies like Meta and Alphabet rely on digital advertising as a meaningful contributor to their revenues and profits. Tariffs and a slower economy would impact this revenue stream, and these two companies could feel the heat more than others in the internet space. Analysts at Oppenheimer estimate that the amount of revenue that could be impacted by tariffs and the economic weakness they will lead to could be 16% for Meta and 15% for Alphabet.

Nowhere to hide

With these widespread tariffs and this amount of uncertainty, there's really nowhere to hide in the stock market. Nearly every stock is sliding as investors anticipate the impact these tariffs will have on consumers, businesses, and the macroeconomic situation, and it's currently unclear how much wiggle room Trump will offer to any parties when it comes to exemptions. So far, the "Trump put" has been non-existent.

That said, if you can take a long-term view and stomach the volatility, these Magnificent Seven stocks are trading at valuations a lot cheaper than they recently did. After Thursday's sell-off, Apple trades at about 28 times forward earnings, Meta is at 21.4 times forward earnings, and Alphabet has sunk below 17 times forward earnings. All of those levels are more than 20% below their 52-week highs. It's likely going to be hectic for a while, but I suspect these megacaps aren't going anywhere and will likely continue to be dominant players in the tech and artificial intelligence sector.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Bank of America is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Bank of America, and Meta Platforms. The Motley Fool has a disclosure policy.