US Tech’s Tariff Carve-Out: Why AI Giants Are Winning the Chip War and What Traders Miss

If you blinked, you might have missed the latest sleight of hand from Washington’s trade magicians. While the world’s attention was fixed on the usual macro circus, China’s Treasury dumping, the dollar’s limp, and commodities’ relentless sprint, President Trump’s administration quietly slipped a golden ticket to America’s biggest tech names. The new chip tariffs? Not for Amazon, Google, or Microsoft. As the FT reports, the White House is carving out exemptions for Big Tech’s AI infrastructure, all while the rest of the world’s chip buyers are left to squabble over supply chains and price hikes.

This is not your garden-variety tariff tweak. It’s a targeted, strategic move that cements US tech’s dominance in the AI arms race, even as global equities wobble and software stocks get their wings clipped by AI disruption fears. The carve-out is less about protecting consumers and more about fortifying the digital ramparts of the US’s most valuable companies. In a market where every basis point of margin is contested, this is the kind of regulatory tailwind that doesn’t just move the needle, it rewrites the playbook.

Let’s talk numbers. The XLK ETF, Wall Street’s tech proxy, is sitting at $143.37, unchanged, but that’s the calm before the next earnings storm. Software stocks have been battered, as Seeking Alpha notes, by existential dread over AI’s cannibalization of legacy business models. But hardware and cloud infrastructure? That’s where the moat is being dug deeper. The carve-out means Amazon, Google, and Microsoft can keep building their AI empires without the tariff drag, while their global rivals eat higher costs and slower innovation cycles.

The market’s reaction has been muted, but that’s more a function of February’s notorious volatility and traders waiting for the next CPI print than a lack of understanding. Under the hood, the carve-out is a signal that the US government is picking winners in the AI race, and it’s not shy about it. This isn’t just about chips, it’s about who controls the data, the compute, and ultimately the future of global tech profits.

Zoom out, and the context is even starker. AI’s profit engine is intensifying the flow of GDP toward listed companies and their top brass, as Greg Ip writes in the WSJ. The carve-out only accelerates this trend. Meanwhile, global investors are hunting for value abroad, spooked by US valuations and a weakening dollar. But if the US tech juggernauts get a regulatory shield, do overseas challengers even stand a chance?

The carve-out also lands at a time when software is losing its luster. Fears that AI will eat the software sector from within have already triggered a sectoral rotation, with money flowing out of pure-play software and into hardware, infrastructure, and the AI supply chain. The tariff exemption turbocharges this rotation. If you’re long software and short hardware, you’re fighting both the market and the US government.

There’s a meta-game here. The US is not just defending its tech champions, it’s weaponizing the tariff regime to ensure that the AI infrastructure remains American. This is industrial policy by another name, and it’s happening in plain sight. For traders, the message is clear: don’t fight the tape, and definitely don’t fight Washington when it’s picking sides.

Strykr Watch

For the tactically minded, XLK at $143.37 is the level to watch. The ETF has been rangebound, but the carve-out could catalyze a breakout if the next round of earnings delivers on the AI growth narrative. Support sits at $140, with resistance at $146. RSI is neutral, but the underlying flows suggest that any dip toward support is likely to be bought aggressively by institutions looking to front-run the next regulatory windfall.

Cloud infrastructure names, think Microsoft, Amazon, Google, are likely to outperform pure software plays in the coming quarter. Watch for relative strength in these names as the market digests the implications of the carve-out. The real tell will be in the options market: look for increased call activity and narrowing put-call spreads as traders position for upside surprises.

The carve-out also puts a floor under the AI supply chain. Semiconductor names with US exposure should see relative outperformance, especially those tied to cloud buildouts. If you’re trading the sector, overweight hardware and infrastructure, underweight legacy software.

Risks abound, of course. If China retaliates with its own tech restrictions, or if Congress decides to take a tougher line on Big Tech, the carve-out could turn from a tailwind to a headwind overnight. But for now, the regulatory regime is clear: the US wants its AI giants to win, and it’s willing to bend the rules to make it happen.

The opportunity is in the rotation. As software gets squeezed and hardware gets the green light, the smart money will be reallocating. If you’re still clinging to the old FAANG playbook, it’s time to update your priors. The new regime is about AI infrastructure, not just eyeballs and ad dollars.

Strykr Take

This is not a drill. The US government just handed its tech champions a regulatory moat, and the market hasn’t fully priced it in. If you’re looking for asymmetric upside, follow the carve-out. Hardware, cloud, and AI infrastructure are where the next leg of outperformance will come from. Don’t get caught on the wrong side of the rotation.