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Nasdaq futures are up over 1.5% at the time of writing on 14 April, after the Trump administration said a range of key tech products such as smartphones, personal computers, memory chips, and servers would be temporarily exempted from the recent hike in US tariffs. The climb extends the US equity gains on Friday after Boston Fed Chief Susan Collins said the central bank stood ready to help stabilize financial markets if necessary.

US President Donald Trump downplayed the exemption as a procedural step over the weekend, saying that these tech products will be moving to a different tariff “bucket,” and that semiconductors and the whole electronic supply chain remain a target of his overall tariffs.

The situation remains fluid, amid continuous twists and turns in developments since the “Liberation Day” announcement less than two weeks ago. But given the 90-day pause on “reciprocal" tariffs and the latest electronics tariff reprieve, we expect the recovery in tech shares to continue.

A flurry of rush orders could benefit tech supply chain names. We think supply chain companies in the semiconductors and hardware segments stand to benefit in the near term as buyers take advantage of the tariff pause and make preemptive purchases. These potential buyers include both end-customers and tech brands or original equipment manufacturers (OEMs). We witnessed similar rush orders during previous escalations of geopolitical uncertainties, such as the inclusion of Huawei in the US Entity List in 2019 and the COVID-19 pandemic when tech demand far surpassed supply. Based on recent quarterly results, inventory days at global original equipment manufacturers (OEMs) are some 20% lower than the pandemic peaks, while utilization rates at supply chain companies are also around 80%, suggesting room to accommodate for rush orders.

Quality tech companies with attractive valuations should rebound as investors refocus on fundamentals. While uncertainty over Trump’s tariffs is far from over, we think the pause indicates a sensitivity to market stress from the administration. Acknowledging the situation remains fluid, we expect moderate earning per share cuts of 3-5% for global tech, which means we believe global tech earnings should still grow by low teens this year. If history continues to be a guide, the current tech rebound has more room to run, benefiting from a strong price-to-earnings multiple rerating in quality tech stocks, in our view. During the first trade war in 2018, heightened tech volatility was followed by a 35% rebound in the next 12 months as investors focused on quality tech companies’ solid fundamentals and strong free cash flow generation.

Encouraging adoption data points to strong long-term potential in artificial intelligence. The underlying AI growth story remains intact. The latest US Census Bureau survey on AI adoption across 1.2 million firms showed strong sequential improvement, and we expect the adoption rate to cross 10% by the end of this year. For comparison, it took 24 years for US e-commerce penetration to cross the 10% threshold. While we acknowledge the risk to big tech’s near-term spending given the elevated uncertainty, we continue to expect strong investments in the coming years as big tech companies further advance their frontier AI models.

So, while near-term volatility is likely to persist, we think the recovery in tech shares should continue amid a broad US stock rally as incremental news flow improves. For under-allocated investors, we think structured strategies can be useful in building up long-term exposure.