How Trump's Presidency Could Affect the Mag 7？
Investors are wagering on deregulation and tax cuts for major corporations following Donald Trump's victory, fueling a broad rally in mega-cap tech stocks.
Tesla Set for Major Upside Amid Political Shifts
$Tesla Motors(TSLA)$
Tesla's CEO Elon Musk is considered a key ally of Donald Trump, contributing over $130 million to his campaign and attending rallies. Trump has proposed a government role for Musk to cut federal spending, potentially reshaping agencies that regulate Tesla. Musk aims to use this influence to hasten approvals for fully autonomous vehicles. Current rules restrict manufacturers to deploying only a few thousand autonomous vehicles annually.
Trump's stance on electric vehicles has shifted to supportive, partly due to Musk's endorsement. At an August rally, Trump stated, "I’m for electric cars... because Elon endorsed me very strongly."
Gene Munster of Deepwater Asset Management posits that a Trump presidency could accelerate Tesla's autonomous driving efforts, with regulatory hurdles overshadowing technical ones. If Tesla secures 50% of the US ride-hailing market by 2030, its revenue could rise by 20%, or about $5 billion.
Impact on Other "Mag 7" Tech Giants
Trump’s domestic deregulation and international tariff hikes could impact tech giants.
1.Antitrust Easing: Apple, Amazon, and $Meta Platforms, Inc.(META)$
Wall Street anticipates Trump will dismiss FTC Chair Lina Khan, who has challenged tech mergers. In 2023, the FTC sued Amazon for monopolization, and the DOJ accused Apple of monopolizing the smartphone market.
Wedbush analyst Dan Ives noted on Wednesday that FTC Chair Lina Khan has been a significant obstacle for Big Tech, challenging various deals in the tech sector. He believes that if Khan were to be removed, it "could be a huge catalyst for more deal flow in the Big Tech landscape."
$Alphabet(GOOG)$
2.AI Acceleration: $Microsoft(MSFT)$
The Trump administration may adopt a more relaxed stance on technology and AI compared to its predecessor. Trump has pledged to repeal Biden’s 2023 executive order on AI risk regulation. His tech supporters, including a16z founder Andreessen, are AI acceleration proponents.
Additionally, the Trump administration might prioritize nuclear energy and AI infrastructure, facilitating reactor construction and data center connectivity.
3.Chip Policy Adjustments: Nvidia might benefit from changes in chip export policies.
Trump criticizes Biden's CHIPS Act as a wasteful effort to attract foreign chip companies to the US.
Adam Posen, director at the Peterson Institute for International Economics, suggests most of the CHIPS Act will remain intact. The Trump administration "may try to reinterpret the CHIPS Act, distributing funds slightly differently from Biden," but he doesn’t foresee a complete overhaul.
Changes in chip export policies could favor $NVIDIA (NVDA.US)$. Currently, Nvidia's advanced AI chip exports to China and certain Middle Eastern countries are restricted. Under Trump, exports to China may remain limited, but licenses for Middle Eastern sales could be easier to obtain.
4.Tariff Increases: Apple, reliant on global supply chains, could be adversely affected by significant tariff hikes.
As most $Apple (AAPL.US)$ products are manufactured in China, increased tariffs might compel the company to pass costs onto consumers.
Investors should note that campaign promises and actual policy implementations can differ, necessitating close monitoring of policy execution and pace.
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