Tech Giants Rally Amid New Trade Truce Between U.S. and China
The group of technology giants—Apple AAPL, Amazon AMZN, Microsoft MSFT, NVIDIA NVDA, Tesla TSLA, Alphabet GOOGL, and Meta META—collectively known as the “Magnificent Seven,” has faced significant challenges due to tariff disruptions. As of May 12, 2025, the Roundhill Magnificent Seven ETF (MAGS) has seen a decline of 6.4% this year, compared to a modest loss of 0.3% for the SPDR S&P 500 ETF Trust (SPY).
The recent announcement of a temporary U.S.-China trade truce provided unexpected relief for the sector. In response, the MAGS ETF surged by 5.8% on May 12, and it has risen 12.9% over the past month.
Post-Truce Performance of the Magnificent Seven
Following the trade truce announcement, Amazon and Meta Platforms led a significant rebound among the Magnificent Seven on the afternoon of May 12.
Performance Highlights
On May 12, Amazon’s stock increased by 8.1%, while Meta saw a rise of 7.9%. Tesla’s shares jumped 6.8%, taking its market capitalization above $1 trillion. Apple climbed by 6.3%, NVIDIA increased by 5.4%, Alphabet’s shares rose 3.4%, and Microsoft gained 2.4%.
Details of the Trade Truce
The United States has agreed to temporarily lower tariffs on Chinese imports. Tariffs on Chinese goods were reduced from 145% to 30%, while China has cut American tariffs from 125% to 10%. These adjustments will remain for 90 days following two days of intense negotiations.
Additionally, tariffs on small packages sent from China with a value up to $800 have been slashed from 120% to 54%, as highlighted in a White House statement.
Positive Outlook for the Tech Sector
This trade development bodes well for tech stocks, alleviating some supply chain concerns. Both Apple and Tesla rely heavily on components from China, and this new agreement positively affected their stock prices. Furthermore, Tesla is set to launch its self-driving taxi service in June.
China’s Influence on Big Tech
Amazon: Approximately 30% of the product value sold on its platform is from China, with Chinese advertisers accounting for 14% of its ad revenue in 2024, as per Raymond James.
Meta: About 11% of Meta’s total ad spending originates from Chinese advertisers, according to Raymond James.
Alphabet: Chinese advertisers comprise around 6% of Google’s ad revenues, as stated by Raymond James.
Apple: Around 90% of iPhones are produced in China, equating to 17% of its 2024 revenue.
NVIDIA: China represents between 20% and 40% of NVIDIA’s end customer base, according to DA Davidson analyst Gil Luria.
Concerns Amidst Optimism
Despite the positive developments, challenges remain. The U.S. has imposed export bans on NVIDIA’s H20 AI chips to China, impacting NVDA shares. Consequently, some analysts believe the days of broad rallies for the Magnificent Seven may be ending in favor of a more careful stock selection process. Nonetheless, opportunities within this group are still not overlooked.
Investment Options
For those seeking diversified investments in this sector, the MAGS ETF, along with the Vanguard Mega Cap Growth ETF (MGK), the Invesco S&P 500 Top 50 ETF (XLG), and the iShares S&P 100 ETF (OEF) are noteworthy options.
For targeted investments, consider Meta-focused ETFs like the Fidelity MSCI Communication Services Index ETF (FCOM). Alternatively, the Consumer Discretionary Select Sector SPDR Fund (XLY) allocates about 35% of its portfolio to Amazon and Tesla.
While chip restrictions pose risks for NVIDIA, ongoing demand for chips remains significant. Investors should watch the NVDA-heavy Strive U.S. Semiconductor ETF (SHOC).
Finally, for those optimistic about MSFT’s performance and Apple’s recent recovery, the iShares Global Tech ETF (IXN) offers a portfolio that consists of approximately 35% in these two companies.
Stay Updated with Key ETF Insights
Subscribe to Zacks’ free Fund Newsletter for weekly updates on top news, analysis, and high-performing ETFs.
