The growth of US tech earnings is vulnerable to ongoing tensions with China.
As Beijing exerts influence in the region, US tech firms will compete for a smaller market share.
Decoupling from China is underway, but it’s likely to be a long process, sources say.
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US tech giants have mostly wrapped up earnings, and their performance shows a clear message: It’s impossible to ignore the impact of China on financial results.
Tesla felt the chill of slowing demand in China as sales tumbled by 4% in the first quarter. Meanwhile, Apple saw 18% of its sales come from China, underscoring the pivotal role the country plays in its earnings strength.
S&P Global data shows that for US chip firms, China is even more important for business than their home turf.
Investors have become more alert to China’s hand in powering the earnings of some of the biggest US tech companies and, consequently, their stock prices, with experts forecasting that the rivalry between the two superpowers to reshape the US tech landscape going forward.
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Geopolitical tensions
Abishur Prakash, the founder of advisory firm The Geopolitical Business, told Business Insider that US tech companies ignoring the geopolitical tensions with China are risking serious setbacks to their portfolios.
US-China Rivalry Will Reshape the Landscape for Big Tech Earnings
