President Donald Trump’s newly announced “reciprocal” tariffs have hit small-cap tech stocks hard, especially in the computer networking, cybersecurity, and fiber-optic gear sectors.
Companies like Arista Networks (ANET), Coherent (COHR), and Fortinet (FTNT) saw massive losses, with Coherent plunging nearly 16%.
These small-cap stocks, which are already dealing with supply chain issues, are now facing skyrocketing operational costs and disrupted production. These operational downsides have left them vulnerable to further declines.
Small Caps Are Taking the Hardest Hit
Small-cap tech companies rely on low-cost overseas manufacturing, especially in China and Japan.
With tariffs targeting these regions, their costs are increasing, squeezing profit margins. Unlike large companies, smaller firms don’t have the financial cushion to absorb these shocks, which makes them more susceptible to significant losses.
The Damage So Far
- Arista Networks fell by 7%.
- Coherent dropped by 16%.
- Fortinet saw a 7.5% decline.
Nevertheless, other small-cap tech stocks, like Ciena (CIEN) and Palo Alto Networks (PANW), are also experiencing very sharp declines
The Situation is Dire
Production delays, higher costs, and mounting uncertainty have these companies struggling to stay competitive.
Unfortunately, many of them may not recover quickly, which makes it crucial for investors to reassess their positions.
As the tariff effects deepen, small-cap stocks will continue to face extreme volatility, which poses a serious risk to your portfolio.
Protect Your Portfolio in All This
Reevaluate your investments
If you are holding small-cap tech stocks, now may be the time to reconsider your strategy.
Diversify your assets
Look into sectors that are less affected by tariffs, such as software or international firms with more diversified operations.
Prepare for more volatility
These stocks are likely to see further declines as the tariff impacts deepen.
The Trump tariffs have caused irreversible damage to small-cap tech stocks, the worst is yet to come.
We recommend that investors stay informed, act quickly, and protect their investments.
