April was marked by significant volatility following Trump’s tariff announcements. The S&P 500 experienced a sharp decline of approximately 12% in early April—one of the most rapid two-day drops in the index’s history. The Roundhill Magnificent Seven ETF (MAGS) saw a maximum drawdown of nearly 30% from its December peak. However, by early May, the S&P 500 had recovered, supported by strong corporate earnings and a 90-day pause on most tariffs.

With six of the Mag-7 stocks having already reported the earnings season has been largely positive for the group:

• Microsoft, Alphabet, and Meta are trading higher than they were the day before “Liberation Day.” Their earnings reports exceeded expectations, and they are not directly affected by the tariffs. Forward-looking commentary from management was notably upbeat.
• Tesla, Apple, and Amazon are directly exposed to the new tariffs. With announcements coming almost daily, the financial impact is difficult to quantify. Nevertheless, management teams emphasised what they can control, and the overall tone was reassuring. While their shares have rebounded, they remain below pre-“Liberation Day” levels.
• Nvidia has yet to report (29 May). Although it too faces risks related to tariffs and export controls, the strong results from its major customers - Microsoft, Meta, and Alphabet - provide a positive read-across.

While the impact of tariffs varies widely, the overall profit outlook for tech giants remains intact.

• Amazon appears well-prepared, with increased inventory and a diversified supply chain.
• Apple estimated a modest $900 million impact in Q2 (approximately 1% of sales), with most products still exempt from tariffs. The company is mitigating further risks by shifting production from China to other regions.
• Meta, Microsoft, and Alphabet face minimal direct exposure. Meta did note some advertising headwinds due to reduced spending by Chinese e-commerce platforms following changes in tariff exemptions but still guided above consensus for Q2.
• Tesla remains exposed but has downplayed concerns - potentially for political reasons.

Overall, the Magnificent 7 are adapting through supply chain diversification, inventory management, and production relocation to sustain financial performance despite ongoing trade tensions.

Advertising is considered cyclical, so a slowdown was expected. But the trends were stronger than anticipated.

• Meta and Google reported strong beats, while Amazon’s advertising growth was in line with expectations.
• All three companies highlighted AI-driven enhancements to their ad platforms, with improved Return on Ad Spend (ROAS) supporting higher pricing.
• The tariff risk is manageable: ad spend by Chinese e-commerce platforms (e.g., Shein, Temu) has declined following tariff exemption withdrawals. Still, Meta guided to 8–15% top-line growth in Q2, driven by strong pricing and international expansion.
• Large platforms remain resilient: Meta, Google, and Amazon all reported steady ad demand throughout Q1, with a strong start to Q2 as well. Advertisers continue to prioritise spend on the largest platforms, leaving smaller players vulnerable - evidenced by Snap’s 15% share decline following weak guidance.

Consensus earnings estimates for the Mag-7 have held up better than for the broader market. The group is now expected to deliver 17.5% EPS growth over the next two years, down only slightly from 18.4% prior to the tariff announcements (see our focus note from 17 March). Within the group, only Tesla has seen material EPS downgrades. Estimates for the other Mag-7 stocks (or Mag-8, if including Broadcom) have remained broadly stable. In contrast, the rest of the S&P 500 has seen more significant revisions. Consensus EPS growth expectations for the index now stand at 11.6% over the next two years, down from 13.0% on 17 March.

On a PEG (Price/Earnings-to-Growth) basis, Nvidia, Amazon, Alphabet, and Broadcom (if included in an expanded Mag-8) screen as more attractively valued than the broader market. In contrast, Apple, Microsoft, and Meta appear more expensive on this metric. Tesla’s elevated valuation cannot be justified by the core EV business alone—it reflects investors' bullish expectations for its long-term opportunities in robotaxis and humanoid robots.