MW These 10 tech stocks could benefit most from softening U.S.-China tariffs

By Laila Maidan

While investors will be more positive on the sector overall, Apple and Dell are among the tech companies that could see particular relief from recent developments

Many technology stocks closed sharply higher on Monday, starting the week off strong after news that the U.S. and China had come to a temporary agreement on tariffs. The positive news means that investors looking for further opportunities in the tech sector can reconsider names that were expected to see significant impacts from tariffs due to their supply-chain exposure.

During a press conference in Geneva, U.S. Treasury Secretary Scott Bessent said that the U.S. and China would pause tariffs for 90 days and that both sides would reduce their reciprocal tariffs by 115%, according to the White House.

The turn of events sent shares of the Roundhill Magnificent Seven ETF MAGS up by 5.8% on Monday. The tech-heavy Nasdaq Composite Index COMP rose 4.4%.

The good news comes just in time: Many big tech names like Google's parent company Alphabet Inc. $(GOOGL)$ $(GOOG)$, Apple Inc. $(AAPL)$, and Facebook's parent company Meta Platforms Inc. $(META)$ delivered solid first-quarter earnings but followed through with vague guidance for the rest of the year as management awaited further tariff news. First-quarter earnings for "large tech" companies grew by 28% compared to the 9% growth shown by the S&P 493, which is the S&P 500 SPX index without the "Magnificent Seven" stocks, according to a May 9 note from Goldman Sachs.

However, the pullback on tariffs doesn't mean that trade wars are over. While a big chunk of tech companies had already been exempt from Trump's tariffs on China, there was still worry that some exemptions were only temporary or that things could get worse, said Eric Compton, Morningstar's director of tech equity research. Monday's development just sends another signal that the Trump administration is further softening its hawkish tone and wants a workable deal.

What does that mean for tech stocks? Well, expect to see a risk reversal, which means investors who dumped tech stocks to move to safer options, like consumer staples, may circle back as expectations for a recession this year lessen, said Compton. It also removes fears of a complete breakdown in U.S. and China relations, said Gil Luria, head of tech research at D.A. Davidson. He believes that a worst-case scenario for tech companies is now less likely.

The reduced volume around uncertainty is especially good news for stocks that would have been most impacted by the so-called "draconian tariffs" on China, Compton said. He's specifically referring to companies that are significantly dependent on hardware sales with products that have their final assembly done in China, like many smartphone and personal-computer manufacturers. Semiconductor and electronic-component suppliers with high exposure to the auto or industrial sectors or significant revenue exposure to China would also have been highly affected.

Below is a list of stocks provided by Compton that are expected to benefit most from positive incremental tariff news related to China. The tables include the stock's gain or loss so far this year, its stock price based on Monday's close, Morningstar's fair-value estimate for the stock's price and the potential upside or downside. Share prices and Morningstar's fair-value estimates for non-U.S. companies below are in local currencies where the stocks are listed.

PC makers

   Company                         Ticker    2025 price change  May 12 price  Morningstar fair value estimate  Implied upside potential 
   Lenovo Group Limited            HK:992                   1%      HKD10.18                         HKD14.00                       38% 
   HP Inc.                         HPQ                    -14%        $28.15                           $33.00                       17% 
   Dell Technologies Inc. Class C  DELL                   -10%       $103.21                          $121.00                       17% 
                                                                                                          Sources: FactSet, Morningstar 

Smartphone makers

                           CompanyTicker    2025 price change  May 12 price  Morningstar fair value estimate  Implied upside potential 
   Apple Inc.                     AAPL                   -16%       $210.56                             $200                       -5% 
                                                                                                         Sources: FactSet, Morningstar 

Mark Werner, portfolio manager at Laffer Tengler Investments, said that while the news on tariffs provides some clarity, each company must continue to deliver results on their key long-term drivers. For Apple, that means material developments on Apple Intelligence, which has seen delays. Additionally, Apple moved quick to resolve concerns around supply-chain issues during its latest earnings call, when Chief Executive Tim Cook said there would be $900 million in tariff-related costs for the June quarter. The company was also ramping up iPhone production in India, where tariffs had been lower than they were for China.

Read also: Here's why Apple's stock is getting dumped despite solid earnings results

Where semiconductor stocks are concerned, Compton noted that while they will be subject to their own set of trade rules, they still indirectly benefit from an ease in tariffs because they supply parts to many of the products that would have been directly impacted by tariffs. However, the semiconductor sector will likely be faced with its own set of regulations, that could factor in national security concerns.

Based on the stocks covered by Morningstar, the four companies below have high revenue exposure in the auto and/or industrial end markets with revenue exposures to China.

Semiconductor manufacturers

   Company                        Ticker    2025 price change    May 12 price  Morningstar fair value estimate  Implied upside potential 
   ON Semiconductor Corporation   ON                     -29%          $44.69                              $70                       57% 
   NXP Semiconductors NV          NXPI            -1%         $206.70                           $280                     35% 
   Infineon Technologies AG       XE:IFX            8%            EUR 34.03                       EUR 43                 26% 
   Monolithic Power Systems Inc.  MPWR                    20%         $708.90                             $770                        9% 
                                                                                                           Sources: FactSet, Morningstar 

When it comes to electronic components, while there are many companies that would be affected by tariffs, Compton said the two below should see the most relief from the latest developments because they had high exposure to the auto and industrials markets, as well as China.

Electronic component makers

   Company                           Ticker    2025 price change  May 12 price  Morningstar fair value estimate  Implied upside potential 
   Sensata Technologies Holding PLC  ST                       1%        $27.64                              $51                       85% 
   Littelfuse Inc.                   LFUS             -8%         $217.69                                  $295             36% 
                                                                                                            Sources: FactSet, Morningstar 

-Laila Maidan

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May 12, 2025 19:05 ET (23:05 GMT)

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