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As Big Tech kicks off its quarterly earnings season this week, the industry’s bellwether companies have been thrust into a cauldron of uncertainty and turmoil that they didn’t anticipate when Donald Trump re-entered the White House nearly 100 days ago.Since President Trump’s Jan. 20 inauguration, Big Tech stocks have been on a see-sawing ride that has eviscerated trillions of dollars in shareholder wealth amid an onslaught of tariffs and other potentially detrimental actions.It’s the polar opposite of what Apple CEO Tim Cook, Tesla CEO Elon Musk, Google CEO Sundar Pichai, Facebook founder Mark Zuckerberg and Amazon founder Jeff Bezos hoped for when they assembled behind Trump as he was sworn in.That display of unity reflected a belief that Trump’s second stint in the White House would be a refreshing change from the heavy-handed regulation of President Joe Biden’s administration while unleashing even more lucrative opportunities in artificial intelligence and deal-making.But the Trump administration’s policies so far have vexed Big Tech’s “Magnificent Seven” companies a group consisting of Apple, Microsoft, Nvidia, Amazon, Tesla, Google parent Alphabet and Facebook parent Meta Platforms. Since Trump’s inauguration, the Magnificent Seven’s combined market value has plunged by $3.8 trillion, or 22%, as of April 20.The financial damage was even more severe a few days after Trump’s April 2 unveiling of sweeping reciprocal tariffs that would have exacted a heavy toll on Big Tech’s supply chains in China and other key markets around the globe. A temporary freeze on the majority of the most punitive tariffs and an exemption from most of the fees on electronics coming in from China has provided some relief, but Trump has made it clear the reprieve may be short-lived.That has left the specter of Trump’s ongoing trade war hanging over Big Tech, whose influence extends around the world.“The mass confusion created by this constant news flow out of the White House is dizzying for the industry and investors and creating massive uncertainty and chaos for companies trying to plan their supply chain, inventory, and demand,” Wedbush Securities analyst Dan Ives said.Besides the upheaval triggered by Trump’s tariffs, his administration is also in the midst of trying to prove regulators’ allegations that Meta has been running an illegal monopoly in social networking, and working to persuade a federal judge to break up Google after its search engine last year was found to be illegally abusing its power. Trump also has given no indication of abandoning antitrust lawsuits filed by the Biden administration that aim to hobble Apple and Amazon.And Nvidia absorbed a significant setback last week when the Trump administration banned it from selling one of its popular AI chips to China, prompting the company to record a $5.5 billion charge to account for the stockpile of processors that it intended to export to that country.Tech CEOs will get a chance to discuss the fallout from the trade war and other challenges still ahead during analyst conference calls that will be held as part of their companies’ financial reports for the January-March quarter.The ritual will kick off Tuesday when Tesla is scheduled to release its full financial report after already revealing that its first-quarter car sales dropped by 13% from the same time last year.The decline occurred against a backdrop of vandalism, widespread protests and calls for a consumer boycott amid a backlash to Musk’s high-profile role in the White House overseeing a cost-cutting purge of U.S. government agencies.After Musk discusses his strategy for reversing a decrease in Tesla’s market value since he joined Trump in the White House, Google parent Alphabet Inc. is scheduled to announce its results on Thursday. Then four of the Magnificent Seven will get their turn next week: Amazon on April 29; Meta and Microsoft on April 30; and Apple on May 1.Nvidia, which operates on a fiscal year ending in January, is scheduled to wrap things up on May 28 with the release of its quarterly results. Michael Liedtke, AP Technology Writer
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Catherine Bracy is the Founder and CEO of TechEquity, an organization working at the intersection of tech and economic equity. The company advocates on behalf of policies that ensure peoplenot companiescontrol how technology shapes their economic futures. She was previously Code for Americas senior director of Partnerships and Ecosystem, and founded Code for All. During the 2012 election cycle, she was director of Obama for Americas Technology Field Office in San Francisco. Whats the big idea? Venture capital isnt just funding innovation; its shaping what kind of innovation is possible. Right now, that system is failing us. It forces startups to sacrifice real problem-solving and innovation for the sake of chasing unsustainable growth. Our economy will be better off if we create and rely on a startup ecosystem that rewards real value rather than speculative hype. Below, Catherine shares five key insights from her new book, World Eaters: How Venture Capital is Cannibalizing the Economy. Listen to the audio versionread by Catherine herselfin the Next Big Idea App. 1. Technology isnt the problem. Venture capital is. A few years ago, I was in a strategy session with labor advocates who were trying to get gig companies (Uber, DoorDash, and the like) to treat their workers better. It was a room full of smart, committed people with great ideas about how to create fairer wages, better protections, and a pathway for these workers to have more stability. As we talked, something clicked for me. We were strategizing ways to convince these companies to changebut at what point in their growth cycle could they have made better choices? When they were tiny startups, just trying to survive, they had no time to think about worker protections. Then, seemingly overnight, they became billion-dollar global giantsexcept by then, their exploitative business models were too big and too profitable to unwind. Venture capital demands exponential growth fast. This struck me as different from how industries used to grow. Traditionally, companies had middle stages: periods of stability where they could adjust their practices, adapt to regulations, and build systems that worked for both employees and society. But tech doesnt work that way. Some of that has to do with software itself because its cheap to build, easy to scale, and can reach millions of users almost instantly. But most of it has to do with the economic incentives behind the companiesand that structure is venture capital. Venture capital demands exponential growth fast. Theres no pause button. No moment where a company can afford to step back and say, How do we do this more responsibly? In the venture model, companies arent built to be stable. Theyre built to scale or die. As Charlie Munger said: Show me the incentives, and Ill show you the outcomes. The economic outcomes were living with todaythe erosion of worker protections, skyrocketing housing costs, and the growing concentration of wealth in fewer handsarent accidents. Theyre a direct result of the incentives baked into venture capital. 2. The Power Law is shaping the economy in ways you dont see. The Power Law is a statistical principle where a few extreme values dominate the dataset. Think earthquakes: most are tiny tremors, but a few are catastrophic. Venture capital portfolios follow this same pattern. Investors spread their bets across dozens of startups, expecting just one or two to hit it big while the rest fail. These extreme successes are called unicorns in the parlance of Silicon Valley. Think earthquakes: most are tiny tremors, but a few are catastrophic. That might sound like a reasonable strategy since startups are risky. But heres where it gets dangerous: As venture capital evolved, the Power Law went from being an observation of how venture capital funds look as a result of pursuing these risky companies to a guiding force for how investors should invest. In other words, instead of pursuing breakthroughs and achieving Power Law distributions as a natural result, venture capital became about pursuing Power Law distributions without any regard to the kind of company that was creating it. It doesnt matter whether a business is solving a real problem, whether its good for society, or even whether its profitable. What matters is scale. This is why we see: Monopolistic tech giants instead of diverse, competitive markets. Growth-obsessed startups that burn through billions with no clear path to profitability. Essential serviceslike housingbeing financialized to fit a Silicon Valley growth narrative. Venture capital started as a way to fund technological breakthroughs. But now, its become a system designed not to create value, but to chase billion-dollar valuations at any cost. That cost is one that the rest of us are asked to bear. 3. Venture capital destroys more value than it creates. Because venture capitalists do not know which startups will be their unicorns, they force every company they invest in to chase billion-dollar growthwhether or not it makes sense. That means: Exploiting workers to cut costs. Shipping half-baked products just to scale faster. Skirting regulations to stay ahead of slower-moving competitors. Committing fraudor at least getting very, very close. The tragedy is that many of these companies could have been solid, sustainable businesses. But because they were forced to chase unrealistic growth, they collapsed. Great ideas get destroyed not because they werent good businesses, but because they werent venture capital businesses. Take LocalData, a startup that helped cities manage property data to increase revenue and prevent blight. It was profitable and growing. But because venture capital investors didnt see it as a billion-dollar opportunity, they pressured the founders to pivot to a different market. The pivot failed and the company shut down. This isnt just one companys story. Its the story of an entire ecosystem that rewards financial engineering over real innovation. 4. The problem isnt the companies that venture capital fundsits the ones it doesnt. If you are an entrepreneur with a great idea that doesnt fit the venture model, you have two choices: 1) Take venture capital money and distort your business to chase growth you cant sustain.2) Get no funding at all. This is especially dangerous in markets like housing and clean energy, areas where we desperately need innovation but where venture capitals demand for hypergrowth doesnt fit. Venture capital doesnt just fund bad businesses. It crowds out the good ones, siphoning capital away from sustainable solutions and into the next specultive bubble. If we want innovation that solves problems, we need new funding models that arent beholden to the Power Law. 5. Its time for the Indie Era of Startups. When I started writing World Eaters, I thought it would be mostly about how venture capital is harming society. But as I talked to entrepreneurs trying to build differently, I realized the story was bigger than just whats broken. There are founders who want to build companies that are profitable and sustainablewho reject the unicorn model in favor of something more resilient. There are investors experimenting with alternative funding models that reward long-term success rather than short-term hype. We can build a startup ecosystem that rewards real value, not just speculative hype. These are companies like Butcherbox, whose founderwho had soured on venture capital after venture capitalists killed a previous business of hisgot his startup capital from a crowdfunding campaign. Butcherbox is now a $500 million per year business with the time and space to take on efforts to improve jobs in the meatpacking industry and support sustainable ranching. Now is the perfect time to help businesses like this succeed. With higher interest rates, the market is shifting. Investors cant throw unlimited cash at money-losing businesses anymore. Companies must prove traction earlier. That means we have a window (before the next bubble inflates) to show that another way is possible. If we do it right, this could be the moment where the Indie Era of Startups begins. Entrepreneurs, investors, and policymakers dont have to accept the Power Law as destiny. We can build a startup ecosystem that rewards real value, not just speculative hype. If we get it right, we wont just fix techwell fix the economy. This article originally appeared in Next Big Idea Club magazine and is reprinted with permission.
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E-Commerce
After a three-day weekend, investors attention was trained on the stock market this morning to gauge how a new trade warning from China would impact stocks. So far, its not a very pretty pictureespecially for some of the markets most influential tech stocks. As of this writing, the S&P 500 is down 2.32% since last Thursday (the market closed for Good Friday), the Nasdaq Composite has slumped by 2.61%, and the Dow Jones Industrial Average is likewise down 2.30%. Its the continuation of a trend for the three major U.S. indexes: Each has dropped in three of the four previous weeks as a result of Trumps tariffs on major trading partners, causing experts to warn that we may be entering a bear market. Major tech companies saw a brief reprieve last week, when the Trump administration clarified that some electronic goods would be briefly exempt from existing reciprocal tariffs. Today, though, both the overall indexes and every member of the Magnificent Seven are back in the red. Heres how Magnificent Seven stocks are faring at the time of this writing: Alphabet Inc. (Nasdaq: GOOG): down 2.26% Amazon.com, Inc. (Nasdaq: AMZN): down 3.42% Apple Inc. (Nasdaq: AAPL): down 2.77% Meta Platforms, Inc. (Nasdaq: META): down 3.29% Microsoft Corporation (Nasdaq: MSFT): down 2.05% NVIDIA Corporation (Nasdaq: NVDA): down 5.49% Tesla, Inc. (Nasdaq: TSLA): down 6.86% Why are tech stocks and markets falling? There are two main factors that experts believe are driving the decline. First, President Trump has spent the last week openly criticizing and calling for the immediate firing of Federal Reserve Chair Jerome Powell. The Fed is the central banking system of the United States, and it has long upheld an independence from politics that most economists feel is essential to the reserve functioning effectively. However, experts are concerned that, should Trump follow through on firing Powell, the move could represent the end of an independent Fed and send stocks into a tailspin. Second, on Monday night, China issued an official warning against any countries striking deals with the U.S. at its expense. The warning came in response to a Bloomberg report that the Trump administration planned to pressure other nations to cut down on trade with China in order to negotiate their own tariff exemptions with the U.S. In response, Chinas Commerce Ministry said in a statement that it would take countermeasures in a resolute and reciprocal manner. Currently, the Trump administration has levied a whopping 145% tariff on Chinese imports, leading China to enforce 125% duties on U.S. goods. For most tech companies, strained trade relations with China have major ripple effects across operations. Most Apple products, for example, are manufactured in China, while many products sold on Amazon are made there as well, and Nvidia chips are manufactured in Taiwan. Likewise, Tesla relies heavily on parts made in China. Later this week, investors are due to get a more overarching sense of how Trumps tariff whiplash has impacted major tech companies, as big names including Tesla, Alphabet, Intel, and IBM are set to share their first-quarter earnings reports.
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