Technology stocks spearheaded the downturn in U.S. equities on Tuesday, as market participants reacted to an intensifying tariff rhetoric emanating from President Donald Trump’s renewed focus on acquiring Greenland.
The State Street Technology Select Sector SPDR ETF (XLK) experienced a 1% decline. Prominent tech giants also saw notable dips, with Nvidia and Tesla each falling nearly 3%. Meta Platforms, Alphabet, Apple, Microsoft, and Amazon each recorded losses exceeding 1%.
These movements exerted downward pressure on the broader market. The Nasdaq Composite was trading 1.3% lower, underperforming the S&P 500 and the Dow Jones Industrial Average, which registered declines of 1.1% and 0.9%, respectively.
Investor sentiment was shaken following President Trump’s threat of imposing new tariffs on nations opposing the United States’ potential acquisition of Greenland. In a social media post, Trump indicated that initial levies could commence at 10% in February, escalating to 25% by June. He also signaled the possibility of substantial tariffs on French goods and voiced criticism towards European allies, amplifying concerns about a broader trade escalation between the U.S. and the European Union.
This resurgence of trade tensions coincides with the gathering of global leaders at the World Economic Forum in Davos, Switzerland. Investors are keenly observing developments for any indications of de-escalating negotiations. However, Wedbush analyst Dan Ives expressed a degree of optimism, suggesting that the current “risk-off dynamic” impacting AI names could present a buying opportunity for long-term tech investors.
“Tech stocks will be hit as the ‘risk off dynamic’ hits AI names front and center, but ultimately, we view this as an opportunity to own the tech winners for 2026 and beyond,” Ives wrote. “The back-and-forth war of words between Trump and the EU will give investors another opportunity to own the tech winners, and despite the bears always trying to yell fire in a crowded theater. … the AI Revolution is still in the early days of playing out, and this soap opera this week is not changing that dynamic in our view, as the 4th Industrial Revolution hits its next stage of growth in 2026.”
Ives further highlighted an anticipated robust fourth-quarter earnings season for tech stalwarts as a potential catalyst. He pointed to approximately $550 billion in capital expenditures fueling the next phase of the AI revolution.
He identified several companies as attractive investment opportunities amid the current market weakness, including Nvidia, Microsoft, Palantir, CrowdStrike, Nebius, Apple, Palo Alto Networks, Alphabet, and Tesla.
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