The world technology giants are resisting the impact of the trade war with strong performance in their earnings reports, indicating that they are able to keep on in a volatile economic environment. Irrespective of the unprecedented tariff uncertainty and commodity supply chain shock, large technology companies such as Alphabet, SK Hynix and Infosys have reported better-than-expected earnings and guided positively. This income power comes as governments around the world rush to strike trade pacts ahead of key deadlines and with billions of corporate gains at stake. The paradox between the resilience of the tech sector and the challenges of the rest of industry reveal the difference in the trade tensions in varied sectors of the economy.
Tech Sector Resilience
Some of the world’s top tech firms, including U.S. search giant Alphabet, South Korean chipmaker SK Hynix and Indian IT services provider Infosys, have provided upbeat guidance in their latest earnings reports, shrugging off an uncertain U.S. trade policy.
Corporate operations have been overshadowed by erratic U.S. trade action that has upended supply chains and left firms to navigate fluid tariffs on top of broader economic uncertainties such as regulatory change and currency fluctuation.
But tech titansย AlphabetGOOGL.O,ย SK Hynix000660.KSย and Infosysย INFY.NSย – which all reported earnings that beat market forecasts – predicted brighter days to come, with Alphabet and SK Hynix both flagging plans to boost spending.
Nvidiaย NVDA.Oย supplier SK Hynix booked record quarterly profit, boosted by strong demand for artificial intelligence chips and customers stockpiling ahead of potential U.S. tariffs.
Indian IT services provider Infosys raised the floor of its annual revenueย forecastย range to 1% to 3%, from flat to 3%, matching analyst expectations.
Among the major earnings on Thursday, Nestle, Reckitt, Roche and Wizz report before local markets open.
Broader Market Turbulence
The upbeat guidance amounted to a bright spot in a turbulent second-quarter earnings season that has so far seen businesses as varied as chipmakers and steelmakersย reportย downbeat results.
Companies haveย reportedย over July 16-22 a combined full-year loss of as much as $7.8 billion, with the automotive, aerospace and pharmaceutical sectors being hurt most by tariffs.
South Korea’s Hyundai Motorย 005380.KSย on Thursday posted a decline in second-quarter operating profit, down 16% from a year earlier, as U.S. tariffs on vehicles and parts started to weigh on its bottom line.
The automaker said U.S. tariffs cost the company 828 billion won ($606.5 million) in the second quarter.
General Motorsย GM.Nย said tariffs knocked $1.1 billion from second-quarter earnings.
On Wednesday, Teslaย TSLA.Oย Chief Executive Elon Musk said U.S. government cuts in support for electric vehicle makers could lead to a “few rough quarters”, as his firmย reportedย its worst quarterly sales decline in over a decade.
Trade Deal Developments
News that the U.S. had struck aย dealย with Japan to lower new tariffs on auto imports and spare it punishing levies on other goods liftedย stockย markets on Wednesday. It stirred hope for a similar deal with the European Union ahead of August 1, when the U.S. said new tariffs will go into effect.
The European Union is moving toward a tradeย dealย that could include a 15% U.S. baseline tariff on EU goods and possible exemptions, two European diplomats said.
One surprise on Thursday was South Korea’s finance ministry sayingย tariff negotiationsย had been postponed due to a scheduling conflict for U.S. Treasury Secretary Scott Bessent.
The announcement cast fresh doubt about whether South Korea would be able to avert U.S. import duties that could hit some of its major exporting industries.
Global Diplomatic Scramble
All eyes are on Washington as governments scramble to close trade deals ahead of next week’s deadline that the White House has already pushed back under pressure from markets and intense lobbying by industry.
While the Japan deal has eased investor worry, the threat of higher tariffs on other large economies remains, including the European Union, Canada and Brazil.
An EU-Chinaย summitย on Thursday will test European resolve and unity as the bloc faces trade pressure from both China as well as the United States, while U.S. Treasury Secretary Scott Bessent meets Chinese officials in Sweden next week.
($1 = 1,365.1800 won)
The capacity to withstand uncertainty across a broad scope of tariffs as shown by the major technology companies gives hope and concern to the world economy. Even as tech giants show that innovation-driven companies can survive storms of trade by having a good fundamentals and market demand for their wares, there is a gloomier tale of high profit erosion and uncertainty on strategy in corporate America at large. With governments hurtling towards pressing deadlines in order to hammer out terminated trade agreements, the final trial of this transitional phase will be whether diplomacy can resolve these issues in time before the pitfalls of the tariffs permanently change the tenets of global business behaviors and competitive benefits.
GCN.com/Reuters.