Trump's Tariffs Threaten to Disrupt AI Industry and Tech Giants

The AI industry doesn't know if Trump just killed its GPU supply

AI companies can't figure out if the Trump tariffs are about to decimate them - and the fact that no one has a clear answer is sending them, and the tech industry overall, into a confusion spiral. The markets are in disarray. Nvidia is down 7.59%, TSMC is down 7.22%. In San Francisco, sources tell us that this isn't a big deal. But in DC, people are panicking. The core question is whether GPUs - the graphics processing units that are crucial to AI computing and other industries - are exempted from Donald Trump's sweeping tariffs, and the answer is startlingly ambiguous. Inside AI labs, researchers expect that their industry will be granted a tariff exemption. "I fully expect this to be a situation where Trump again gives companies he views as important/on his side/whatever a hall pass," similar to what the President did with Apple during his first term, one source inside a major AI lab told The Verge. In Washington, however, nobody seems sure what the current state of play is. The Trump administration spelled out an exception for the semiconductor chips at the heart of a GPU, but for now, complete electronic products that contain chips will apparently be subject to tariffs. And companies that need GPUs for machine learning, deep learning, real-time processing, and much more require not just the chip, but the entire machine built around it. "Most AI GPUs are, I believe, imported not as chips but as servers, largely from Taiwan," Chris Miller, a professor at Tufts University and the author of Chip War: The Fight for the World's Most Critical Technology, told The Verge in an email. "So these would presumably face the general Taiwan tariff rate" of 32%, currently scheduled to hit on April 9th. Ordinarily, government agencies might be able to explain what's happening. But when asked for clarity, a public affairs official at NIST, the agency at the Commerce Department overseeing the CHIPS Act - a $50 billion investment in building chip manufacturing plants on American soil - directed The Verge to the White House. The White House did not immediately return a request for comment. Neither did the U.S. Trade Representative, the agency responsible for creating and executing the President's tariff strategy. While the SF crowd is bullish on getting exemptions, tech lobbyists in Washington are closer to the chaos that is the second Trump administration, and are far too familiar with the president's mercurial whims and vindictive nature, particularly against the tech industry. The fact that the tariffs are so vague and seem haphazardly thrown together - so haphazard, in fact, that there's a legitimate argument that they were generated by AI - is only adding to their worries. "Everyone's asking for clarity" from the administration, one lobbyist at a major tech company told The Verge. "So far, folks are saying that they think we're okay, but not sure yet." That's not exactly a ringing vote of confidence for GPU tariff exemptions. The GPU confusion is rippling beyond the AI industry, hitting the Big Tech companies that stock thousands of these devices in datacenters across the country. Amazon, Google, and Microsoft all rely on access to GPUs to prop up their multi-billion dollar cloud architectures. Clearly, the market isn't confident that their bottom line will weather these tariffs: The so-called "Magnificent Seven", which includes the three companies above, have lost more than $1 trillion in market capitalization since the tariffs were announced. (Spokespeople for Google and Microsoft declined to comment for this story.) The AI industry has reason to think Trump might favor it in particular. Just a few months ago, OpenAI's Sam Altman and other tech CEOs stood in the White House alongside the president to announce Stargate, a $500 billion datacenter infrastructure project devoted to fulfilling Altman's demands for "more compute." The current unclear state of GPUs coupled with the unpredictability of Trump's tariffs in general, however, could shake their confidence -- or at least mean they must renew attempts to curry Trump's favor. GPU juggernaut Nvidia has apparently begun moving manufacturing to the US, which it hopes will help insulate it from the tariffs. Reuters reported last December, for instance, that it was finalizing plans to produce its Blackwell AI GPU chip at TSMC's Arizona plant, which aims to start fabricating chips this year. Nvidia CEO Jensen Huang alluded to this partnership in a recent investor Q&A: "We're manufacturing in so many different places. We could shift things around. Tariffs will have a little impact for us short term. Long term, we're going to have manufacturing onshore." The same can't be said for compute-hungry AI labs, hyperscale cloud providers, or even average PC builders -- all of whom might end up paying substantially more for GPUs. "None of this is impossible, but trying to produce every segment of electronics supply chains domestically will produce a staggering increase in cost, especially in the short-term, given that some of the capabilities simply don't exist domestically," Miller said. That doesn't even take into account the tariffs on the raw materials needed to build these machines and plants, or any retaliatory measures: on Friday, for instance, China announced a new set of export restrictions on rare earth minerals, which are crucial for electronics manufacturing. The U.S. currently imports 90 percent of its rare earth minerals from China. "If the tariffs are unchanged," Miller added, "we should prepare for a significant increase in the price of electronics." But ultimately, fealty to Trump might be more crucial than an appeal to reason. Amazon founder Jeff Bezos has pledged allegiance to the new administration, which is important for Anthropic, since it sources some of its compute through Amazon. These deals are fragile, though. A single critical story in Bezos' paper The Washington Post could lose Amazon (and by association, Anthropic) a tariff exemption, for instance. Anthropic also sources some of its compute through Google; along with Bezos, Alphabet CEO Sundar Pichai joined the gaggle of tech billionaires behind Trump at his inauguration. And there are other factors that could indirectly cause problems for these companies, of course -- like the US being pushed into a recession that devastates the tech economy. "The second order effects of the tariffs could still be bad," the AI lab source added. The market tumbles seemed to have mobilized tech leaders. A group of tech CEOs and finance leaders are on their way to Trump's private resort, Mar-a-Lago, according to journalist Kara Swisher. The goal seems to be to find some sense in these tariffs -- and perhaps some exemptions.

Trump tariffs could stymie Big Tech's US data center spending spree

April 3 (Reuters) - U.S. President Donald Trump's sweeping reciprocal tariffs could hamstring Big Tech's billion-dollar efforts to build artificial intelligence infrastructure in the country, likely undermining a key goal of the administration, analysts said on Thursday. Trump and technology executives have touted lofty plans by Oracle (ORCL.N), opens new tab, SoftBank (9984.T), opens new tab and others to invest heavily in artificial intelligence since his return to the White House earlier this year. On Wednesday, Trump slapped steep duties on leading technology equipment suppliers including 34% on China, 32% on Taiwan and 25% on South Korea while imposing a 10% baseline tariff on all imports to the U.S. Electronics - which include smartphones, PCs and data-center equipment - were the second biggest imports last year at nearly $486 billion worth of goods, according to Census Bureau data. Bernstein analysts pegged data processing machine imports at about $200 billion in 2024, mostly from Mexico, Taiwan, China, and Vietnam. "Capital expenditure by tech giants will get reshuffled: Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts," said Abhishek Singh, partner at research firm Everest Group. While semiconductors were exempted from Wednesday's tariffs, the U.S. is planning targeted tariffs for chips that could come later, a White House official said. "There's no doubt that the equipment that goes into data centers will become significantly more expensive ... Microsoft has already started articulating a more balanced, cautious approach to their data center build-out, and to some extent Amazon as well," said D.A. Davidson analyst Gil Luria. Big Tech shares sharply fell on Thursday, with the tech-heavy Nasdaq tumbling 4%. Amazon, Alphabet and Microsoft did not immediately respond to requests for comment. DARK CLOUDS The increased costs could delay data-center expansion and AI adoption, setting back ambitious plans such as Stargate, the $500 billion data-center venture between ChatGPT maker OpenAI, SoftBank Group (9984.T), opens new tab and Oracle (ORCL.N), opens new tab. Trump announced Stargate earlier this, with a goal to outpace rival nations in AI development. The project would span construction of 20 data centers in the United States. "Stargate was already unlikely to get to that scale even before these things happened. Given the shock to the economy that these tariffs represent, it is highly unlikely that such a risky endeavor will be able to raise anywhere near that number in terms of debt financings," Luria said. The tariffs are also a new threat to the top cloud service providers such as Microsoft (MSFT.O), opens new tab, Alphabet (GOOGL.O), opens new tab and Amazon.com (AMZN.O), opens new tab, already facing skepticism from investors over their steep AI budgets. TD Cowen analysts recently said Microsoft had abandoned data-center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months due to an oversupply relative to current demand. Brokerage HSBC on Thursday also warned of a potential slowdown in spending at cloud companies next year, and cut its price target on Nvidia, the biggest winner in the AI race over the last couple of years. "The tariffs are likely to create demand destruction, which means cutbacks on software and cloud spending. Alphabet will see a double whammy with digital advertising also cut back in a tougher economic environment - with Meta (META.O), opens new tab also hit," said Ben Barringer, global technology analyst at Quilter Cheviot. Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Why tariffs are kryptonite to the AI business

Why it matters: Key industry players backed Trump or made nice with him after his election win, but the centerpiece of his economic policy makes an AI slowdown -- or even a crash -- much more likely. The big picture: The AI giants need cheap data and cheap energy to keep building bigger models, and mountains of cash to pay for it all. Yes, but: In the trade-war era kicked off by Trump's tariffs, capital will move more cautiously and growth will slow or vanish. In the new post-tariff world, expect many more investors to watch and wait rather than toss more billions on the fire. The best case for AI companies is that their products will thrive as customers seeking savings in a downturn deploy AI and automation to try to cut costs. Between the lines: Some in the MAGA camp see AI as a key player in their project to restore the heyday of domestic U.S. manufacturing. Lutnick isn't totally clear here. But it sounds like he's saying iPhone manufacturing will move to the U.S. but will be automated. The more likely scenario is a broad economic slowdown, with the AI industry, along with the rest of the U.S. economy, mired in the doldrums of uncertainty and fear. The bottom line: The biggest companies -- Microsoft, Google, Apple and Meta -- all have enough cash flow and reserves to weather such a storm. Not so for the rest of the AI industry.

Trump's Tariffs Are a Bruising Defeat for the AI Industry

If you follow tech stocks, there's probably one thing on your mind today: Donald Trump's tariffs. Yesterday, Trump announced his long-teased "reciprocal tariffs" on foreign imports coming into the US. Among them are a 32 percent tariff on Taiwan, 24 percent on Japan, 26 percent on India, and 34 percent on China -- all major players in the global tech trade. As a result, the magnificent seven (M7) stocks -- a stock trader term for the current whales of the tech industry: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla -- are in a freefall today, as investors sell off their shares to brace for economic uncertainty. Among the tech industry, the stagnant AI sector is being hit particularly hard, as energy costs are anticipated to skyrocket along with the cost of important resources like steel, precious minerals, and semiconductors. As such, the cost to build and run data centers, the massive facilities that make AI computing possible, is expected to spike as the supply chain adjusts to the new normal. The vast majority of chips that power these data centers come from hard-hit countries like Taiwan, Thailand, Japan, and Vietnam, while the US makes just 11 percent of its chips at home. Trump's tariffs will force countries from those companies to hike their chip prices, and US companies will no doubt hike their prices to compensate, which will ultimately run off to consumers. That's a crushing blow for American AI companies, which were already facing the consequences of investor skepticism, lagging revenue, and a disappointing debut AI IPO by CoreWeave. Broader details about how these tariffs will affect the tech industry are foggy right now, as the stock market is moving at a breakneck pace, but there is one common theme: everything is down. Apple, for example, is heading for its biggest single-day plunge in stock price in nearly 5 years, dropping over 8 percent in just the first few hours of trading. Other M7 stocks are likewise plummeting, with Amazon down almost 9 percent, and Nvidia down by 6.7 at the time of writing. Tesla has continued its months-long cascade with a 7 percent dip so far. If you're wondering why we're doing this, you're not alone. For decades, the United States has sat atop the global economic food chain. Thanks to years of military and economic supremacy, the US dollar became the world standard, making it easy to export cheap consumer goods as high-paying American jobs became starvation industries in countries dependent on US trade. Trump's tariffs seem to be an attempt to reverse all that -- an economic experiment that's never really been attempted at this scale. The entire move hinges on the bet that companies will shift production from places like Vietnam and Taiwan back into the US, a gamble which business leaders say comes with high costs and even higher risks. As Trump's tariffs aren't enshrined in law, they could be easily undone by the courts or the next presidential administration, making a long-term investment into, say, a $5 billion semiconductor plant on US soil hard to justify from a business standpoint -- and at the end of the day, isn't what this is all about?

How Trump's Tariffs Could Make AI Development More Expensive

Stocks in AI companies were among the biggest losers after President Trump announced sweeping tariffs on foreign trading partners last week, in a sign that those tariffs could be bad news for the industry. The companies at the forefront of the AI industry are currently spending hundreds of billions of dollars on building new datacenters to train AI models. Tariffs will increase the already gargantuan costs of those efforts, analysts say. "The tariffs will make building AI datacenters much more expensive, both because AI servers are largely imported and will face tariffs, at least until supply chains can be rejigged, and because much of the other equipment in datacenters, like the cooling and power infrastructure, is imported as well," says Chris Miller, author of Chip War.

Nvidia, TSMC, chip stocks crash as Trump's new tariffs shake semiconductor industry - How will rising costs and supply chain disruptions impact AI and tech companies?

Following Trump's announcement, Nvidia stock fell over 5%, while its competitor Advanced Micro Devices (AMD) dropped about 4%. Broadcom (AVGO) saw a steep 7% decline, and Micron Technology (MU), a key memory chip supplier for Nvidia's GPUs, also lost 7% in value. TSMC, the Taiwanese giant responsible for manufacturing advanced semiconductors for companies like Nvidia and Apple (AAPL), also sank approximately 5%. This reaction in the stock market reflects growing fears about supply chain disruptions and cost increases due to new tariff measures. Trump revealed that starting April 5, a 10% baseline tariff would be applied globally. However, from April 9 onward, reciprocal tariffs will be imposed based on individual countries' trade practices: This move is expected to impact chip imports from these countries, which are major suppliers of AI servers, laptops, and other high-tech products to the U.S. These tariffs directly impact companies like Nvidia, which rely heavily on Taiwan and China for chip manufacturing. TSMC, the world's leading semiconductor foundry, plays a critical role in producing chips for Nvidia, AMD, and even Intel (INTC). The U.S. imported around $19 billion in servers equipped with Nvidia GPUs from Taiwan and $34 billion from China in 2024, according to trade data compiled by Michigan State University's supply chain expert Jason Miller. These tariffs will increase costs for U.S. companies relying on these imports, potentially slowing demand for AI chips and computing hardware. Trump has positioned these tariffs as a way to push companies to manufacture their chips in the U.S. He pointed to TSMC's $100 billion investment in Arizona, an expansion that started under the Biden administration with support from the U.S. Chips and Science Act. However, industry experts are skeptical. Truist analyst William Stein surveyed 10 semiconductor manufacturers and distributors, and none indicated plans to move operations to the U.S. in response to these tariffs. One respondent even suggested that companies are avoiding major investments in new locations because they doubt these tariffs will be permanent. Despite the immediate stock drop, some analysts believe AI chipmakers like Nvidia may weather the storm better than others. Stein noted that AI companies are in an aggressive race to develop Artificial General Intelligence (AGI) at almost any cost, meaning demand for Nvidia's GPUs may remain strong despite higher prices. However, long-term impacts remain uncertain. If these tariffs stay in place, they could lead to increased costs for U.S. tech companies, potential supply chain restructuring, and shifts in global chip manufacturing strategies. For now, investors and industry leaders will be closely watching how these tariffs unfold and whether further trade actions follow.

Trump tariffs could stymie Big Tech's US data center spending spree

Electronics - which include smartphones, PCs and data-center equipment - were the second biggest imports last year at nearly $486 billion worth of goods, according to Census Bureau data. Bernstein analysts pegged data processing machine imports at about $200 billion in 2024, mostly from Mexico, Taiwan, China, and Vietnam.US President Donald Trump's sweeping reciprocal tariffs could hamstring Big Tech's billion-dollar efforts to build artificial intelligence infrastructure in the country, likely undermining a key goal of the administration, analysts said on Thursday. Trump and technology executives have touted lofty plans by Oracle, SoftBank and others to invest heavily in artificial intelligence since his return to the White House earlier this year. On Wednesday, Trump slapped steep duties on leading technology equipment suppliers including 34% on China, 32% on Taiwan and 25% on South Korea while imposing a 10% baseline tariff on all imports to the U.S. Electronics - which include smartphones, PCs and data-center equipment - were the second biggest imports last year at nearly $486 billion worth of goods, according to Census Bureau data. Bernstein analysts pegged data processing machine imports at about $200 billion in 2024, mostly from Mexico, Taiwan, China, and Vietnam. "Capital expenditure by tech giants will get reshuffled: Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts," said Abhishek Singh, partner at research firm Everest Group. While semiconductors were exempted from Wednesday's tariffs, the U.S. is planning targeted tariffs for chips that could come later, a White House official said. "There's no doubt that the equipment that goes into data centers will become significantly more expensive ... Microsoft has already started articulating a more balanced, cautious approach to their data center build-out, and to some extent Amazon as well," said D.A. Davidson analyst Gil Luria. Big Tech shares sharply fell on Thursday, with the tech-heavy Nasdaq tumbling 4%. Amazon, Alphabet and Microsoft did not immediately respond to requests for comment. Dark clouds The increased costs could delay data-center expansion and AI adoption, setting back ambitious plans such as Stargate, the $500 billion data-center venture between ChatGPT maker OpenAI, SoftBank Group and Oracle. Trump announced Stargate earlier this, with a goal to outpace rival nations in AI development. The project would span construction of 20 data centers in the United States. "Stargate was already unlikely to get to that scale even before these things happened. Given the shock to the economy that these tariffs represent, it is highly unlikely that such a risky endeavor will be able to raise anywhere near that number in terms of debt financings," Luria said. The tariffs are also a new threat to the top cloud service providers such as Microsoft, Alphabet and Amazon.com, already facing skepticism from investors over their steep AI budgets. TD Cowen analysts recently said Microsoft had abandoned data-center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months due to an oversupply relative to current demand. Brokerage HSBC on Thursday also warned of a potential slowdown in spending at cloud companies next year, and cut its price target on Nvidia, the biggest winner in the AI race over the last couple of years. "The tariffs are likely to create demand destruction, which means cutbacks on software and cloud spending. Alphabet will see a double whammy with digital advertising also cut back in a tougher economic environment - with Meta also hit," said Ben Barringer, global technology analyst at Quilter Cheviot.

Trump's Reciprocal Tariffs Threaten To Derail Big Tech's Billion-Dollar AI Infrastructure Plans, Analyst Singles Out This OpenAI-Linked Project As Likely To Get Hit - Apple (NASDAQ:AAPL), Advanced Micro Devices (NASDAQ:AMD)

President Donald Trump's new reciprocal tariffs could undermine the billion-dollar AI infrastructure projects being spearheaded by leading tech companies, analysts warn. What Happened: On Thursday, analysts highlighted the negative impact of the Trump administration's tariffs on technology equipment, which were levied at 34% on China, 32% on Taiwan, and 25% on South Korea, while also imposing a 10% baseline tariff on all imports to the U.S., reported Reuters. The tariffs threaten to raise the costs of essential hardware used in artificial intelligence infrastructure, such as data centers, servers, and chips. See Also: Apple Making iPhones In America A Fantasy That Sounds Great 'Behind The Microphones,' Says Top Analyst Dan Ives "Capital expenditure by tech giants will get reshuffled," said Abhishek Singh, partner at Everest Group. "Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts." The tariffs are expected to increase the cost of building data centers in the U.S., potentially delaying large-scale AI projects. D.A. Davidson analyst Gil Luria pointed out that companies like Microsoft Corporation MSFT and Amazon.com, Inc. AMZN have already begun to scale back their data center investments due to financial uncertainty. "Microsoft has already started articulating a more balanced, cautious approach to their data center build-out," Luria noted. The most high-profile project affected is the $500 billion Stargate venture between Oracle Corp ORCL, SoftBank Group SFTBF SFTBY, and OpenAI, aimed at building 20 data centers across the U.S. "Stargate was already unlikely to get to that scale even before these things happened. Given the shock to the economy that these tariffs represent, it is highly unlikely that such a risky endeavor will be able to raise anywhere near that number in terms of debt financings," stated Luria. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: President Trump's sweeping new trade tariffs jolted global markets on Thursday, sparking a dramatic sell-off reminiscent of the pandemic-era crashes. Wall Street witnessed a staggering $2 trillion wiped from market value, with the 10 largest U.S. companies alone accounting for $1 trillion of those losses. Apple Inc. AAPL plunged 9.25%, Nvidia Corp. NVDA fell 7.81%, Amazon.com Inc. AMZN dropped 8.98%, and Advanced Micro Devices Inc. AMD slid 8.9%. Tesla Inc. TSLA declined 5.47%, while Meta Platforms Inc. META lost 8.96%. Alphabet Inc.'s Class A shares GOOGL dipped 4.02%, and Class C shares GOOG were down 3.92%, according to data from Benzinga Pro. Photo Courtesy: Jack_the_sparow on Shutterstock Read Next: Tim Cook Praises China's DeepSeek For Driving Efficiency, Stresses Apple's 'Prudent And Deliberate' Approach Toward Capital Expenditure Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AAPLApple Inc$203.38-9.16%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum83.94Growth44.96Quality85.46Value7.18Price TrendShortMediumLongOverviewAMDAdvanced Micro Devices Inc$94.01-8.69%AMZNAmazon.com Inc$178.68-8.84%GOOGAlphabet Inc$152.57-3.96%GOOGLAlphabet Inc$150.83-3.95%METAMeta Platforms Inc$532.01-8.89%MSFTMicrosoft Corp$372.10-2.63%NVDANVIDIA Corp$102.42-7.25%ORCLOracle Corp$137.64-5.64%SFTBFSoftBank Group Corp$62.2732.5%SFTBYSoftBank Group Corp$23.39-6.89%TSLATesla Inc$268.11-5.18%Market News and Data brought to you by Benzinga APIs

Trump tariffs could stymie Big Tech's US data center spending spree

(Reuters) - U.S. President Donald Trump's sweeping reciprocal tariffs could hamstring Big Tech's billion-dollar efforts to build artificial intelligence infrastructure in the country, likely undermining a key goal of the administration, analysts said on Thursday. Trump and technology executives have touted lofty plans by Oracle, SoftBank and others to invest heavily in artificial intelligence since his return to the White House earlier this year. On Wednesday, Trump slapped steep duties on leading technology equipment suppliers including 34% on China, 32% on Taiwan and 25% on South Korea while imposing a 10% baseline tariff on all imports to the U.S. Electronics - which include smartphones, PCs and data-center equipment - were the second biggest imports last year at nearly $486 billion worth of goods, according to Census Bureau data. Bernstein analysts pegged data processing machine imports at about $200 billion in 2024, mostly from Mexico, Taiwan, China, and Vietnam. "Capital expenditure by tech giants will get reshuffled: Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts," said Abhishek Singh, partner at research firm Everest Group. While semiconductors were exempted from Wednesday's tariffs, the U.S. is planning targeted tariffs for chips that could come later, a White House official said. "There's no doubt that the equipment that goes into data centers will become significantly more expensive ... Microsoft has already started articulating a more balanced, cautious approach to their data center build-out, and to some extent Amazon as well," said D.A. Davidson analyst Gil Luria. Big Tech shares sharply fell on Thursday, with the tech-heavy Nasdaq tumbling 4%. Amazon, Alphabet and Microsoft did not immediately respond to requests for comment. DARK CLOUDS The increased costs could delay data-center expansion and AI adoption, setting back ambitious plans such as Stargate, the $500 billion data-center venture between ChatGPT maker OpenAI, SoftBank Group and Oracle. Trump announced Stargate earlier this, with a goal to outpace rival nations in AI development. The project would span construction of 20 data centers in the United States. "Stargate was already unlikely to get to that scale even before these things happened. Given the shock to the economy that these tariffs represent, it is highly unlikely that such a risky endeavor will be able to raise anywhere near that number in terms of debt financings," Luria said. The tariffs are also a new threat to the top cloud service providers such as Microsoft, Alphabet and Amazon.com, already facing skepticism from investors over their steep AI budgets. TD Cowen analysts recently said Microsoft had abandoned data-center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months due to an oversupply relative to current demand. Brokerage HSBC on Thursday also warned of a potential slowdown in spending at cloud companies next year, and cut its price target on Nvidia, the biggest winner in the AI race over the last couple of years. "The tariffs are likely to create demand destruction, which means cutbacks on software and cloud spending. Alphabet will see a double whammy with digital advertising also cut back in a tougher economic environment - with Meta also hit," said Ben Barringer, global technology analyst at Quilter Cheviot. (Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)

Trump's new tariffs cast shadow over Big Tech's AI expansion plans - VnExpress International

Trump and technology executives have touted lofty plans by Oracle, SoftBank and others to invest heavily in artificial intelligence since his return to the White House earlier this year. On Wednesday, Trump slapped steep duties on leading technology equipment suppliers including 34% on China, 32% on Taiwan and 25% on South Korea, while imposing a 10% baseline tariff on all imports to the U.S. Electronics - which include smartphones, PCs and data-center equipment - were the second biggest imports last year at nearly $486 billion worth of goods, according to Census Bureau data. Bernstein analysts pegged data processing machine imports at about $200 billion in 2024, mostly from Mexico, Taiwan, China, and Vietnam. "Capital expenditure by tech giants will get reshuffled: Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts," said Abhishek Singh, partner at research firm Everest Group. While semiconductors were exempted from Wednesday's tariffs, the U.S. is planning targeted tariffs for chips that could come later, a White House official said. AMD said it is "assessing the details and any impacts on our broader customer and partner ecosystem." Intel, Nvidia and Taiwan Semiconductor Manufacturing Co. declined to comment. Broadcom did not respond to a request for comment. Shares of Nvidia, AMD and Broadcom closed down between 7% and 10% and U.S.-listed shares of TSMC ended 7.6% lower on Thursday. Intel closed up 2.1% after a report of the company's preliminary joint venture agreement with TSMC. "There's no doubt that the equipment that goes into data centers will become significantly more expensive ... Microsoft has already started articulating a more balanced, cautious approach to their data center build-out, and to some extent Amazon as well," said D.A. Davidson analyst Gil Luria. Analysts said data center building costs will rise, although the extent of the impact is not yet clear. The key is how the AI hardware is classified, according to Dylan Patel, founder of industry research firm SemiAnalysis. The Trump administration could exempt semiconductors but not the circuit board assemblies they are sold with, which would mean they would be affected by the Taiwan tariffs, Patel added. But if the hardware assemblies are also exempt, costs might not increase much. Dark clouds The increased costs could delay data-center expansion and AI adoption, setting back ambitious plans such as Stargate, the $500 billion data-center venture between ChatGPT maker OpenAI, SoftBank Group and Oracle. Trump announced Stargate earlier this year, with a goal to outpace rival nations in AI development. The project would span construction of 20 data centers in the United States. "Stargate was already unlikely to get to that scale even before these things happened. Given the shock to the economy that these tariffs represent, it is highly unlikely that such a risky endeavor will be able to raise anywhere near that number in terms of debt financings," Luria said. The tariffs are also a new threat to the top cloud service providers such as Microsoft, Alphabet and Amazon.com, already facing skepticism from investors over their steep AI budgets. On Thursday, shares of Microsoft closed down 2.4%, while those of Amazon and Alphabet ended lower around 9% and 4% respectively. Microsoft declined to comment, while Amazon and Alphabet did not immediately respond to requests for comment. TD Cowen analysts recently said Microsoft had abandoned data-center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months due to an oversupply relative to current demand. Brokerage HSBC on Thursday also warned of a potential slowdown in spending at cloud companies next year, and cut its price target on Nvidia, the biggest winner in the AI race over the last couple of years. "The tariffs are likely to create demand destruction, which means cutbacks on software and cloud spending. Alphabet will see a double whammy with digital advertising also cut back in a tougher economic environment - with Meta also hit," said Ben Barringer, global technology analyst at Quilter Cheviot.