Tech Stocks Decline Following Tariff Imposition: Invest Wisely

Many technology stocks took a hit this month after the Trump administration announced its “Liberation Day” tariffs against most of the nation’s main trading partners. Heightened tariffs targeting China, Taiwan, South Korea, Thailand, Vietnam, and India raised significant concerns for American tech firms highly reliant on these nations.

While this tumult could subside if rational approaches prevail, it’s premature to invest in tariffs-affected stocks like Apple until these challenges recede. Instead, tech investors should explore companies that are inherently insulated from these tariffs.

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Three tech stocks that stand out in this situation are AT&T (NYSE: T), ServiceNow (NYSE: NOW), and Fortinet (NASDAQ: FTNT). It could be wise to consider investing in these stocks incrementally—approximately $1,000 over the upcoming quarters—to leverage dollar-cost averaging amid this volatile market.

Dividend Opportunity: AT&T

As one of the largest telecom giants in the U.S., AT&T has streamlined its operations over the last four years by divesting DirecTV, Time Warner, and various smaller media assets. These strategic moves have freed capital for bolstering its core 5G and fiber offerings, paying down debt, and maintaining dividend distributions.

In 2023 and 2024, AT&T added a total of 3.4 million postpaid phone subscribers and 2.1 million fiber subscribers, while competitors faced challenges. The company’s free cash flow (FCF) increased by 19% to $16.8 billion and is projected to rise another 5% to $17.6 billion in 2024, comfortably covering its annual dividend of just over $8 billion.

Analysts predict a 1% growth in AT&T’s revenue and a 3% increase in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). While it exhibits slow growth, its stability against tariffs, high forward dividend yield of 3.9%, and a valuation of just 7 times this year’s adjusted EBITDA make it a solid option for conservative investors.

Growth Potential: ServiceNow

ServiceNow’s cloud solutions assist organizations in converting unstructured work patterns into efficient digital workflows. This transformation enables task automation, better support for hybrid and remote workforces, and overall enhanced company productivity. The Now Assist AI platform amplifies these capabilities through AI chatbots and automation features.

Because it primarily provides cloud services rather than dealing with import or export of physical goods, ServiceNow is insulated from tariffs. Additionally, firms often turn to its solutions during economic slumps to enhance efficiency and minimize costs. In 2024, 63% of its revenue was generated in North America, and the company does not sell its services directly in China.

For 2025, analysts forecast revenue and adjusted EPS growth of 19% and 18%, respectively. The company may encounter challenges if the trade war escalates. Although its stock currently trades at 47 times forward earnings, it presents an attractive long-term growth potential amid market fluctuations.

Cybersecurity Strength: Fortinet

Cybersecurity firms also demonstrate resilience amid tariffs for two key reasons: they provide software solutions, and their clients will maintain essential digital defenses regardless of broader economic challenges.

Fortinet stands out as a reliable player in the sector, serving over 830,000 clients worldwide. Originally known for next-gen firewalls, Fortinet has evolved its offerings into a comprehensive “Security Fabric” that integrates a range of on-premise and cloud-based security solutions. Its proprietary chips are tailored for optimal performance with its software and hardware.

Analysts expect Fortinet to achieve revenue and adjusted EPS growth of 14% and 4%, respectively, by 2025. While its margins may face short-term pressure from new chip development, its long-term prospects are bright. The stock is not an outstanding bargain at 36 times forward earnings, but remains a worthy investment as the market navigates challenges.

Considering AT&T? Here’s What to Know

Before purchasing stock in AT&T, it’s crucial to evaluate the following:

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Leo Sun has positions in Apple. The Motley Fool has positions in and recommends Apple, Fortinet, and ServiceNow. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.