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How your tech stock holdings will be impacted by the election
The outcome of November’s presidential election could have major implications for some popular technology stocks. Ahead of the high-stakes race, Raymond James laid out a list of some key technology, media and telecommunications stocks that could benefit in a variety of different outcomes. In 2020, the firm’s picks outperformed the S & P 500 by 1% between the election and inauguration — and 7.7% in the year that followed. Broadly speaking, Raymond James views a Donald Trump reelection as a potential boon for the industry and artificial intelligence — with heightened export controls in the semiconductor industry. It could also lead to increased tensions in China and the obstruction of mergers and acquisitions activity across borders. “The deregulatory focus of a second Trump administration would likely see less federal oversight and the potential rollback of reporting requirements for AI firms developing frontier models, while also supporting data center development through nuclear energy permitting,” wrote Ed Mills, the firm’s Washington policy analyst. Meanwhile, a victory by Vice President Kamala Harris victory may lead to tighter AI regulations focused on safety, ethics and protecting consumers. Mills also anticipates more focus on supporting domestic semiconductor production. Democrat sweep A Harris presidency and a Democrat-led Congress could be a boon for companies with exposure to climate regulation and “high margin vertical” software companies with less cyclical exposure. That includes cloud solutions provider Veeva Systems . Jabil and Flex should also benefit in this scenario, with analyst Melissa Fairbanks noting that a Harris win would incentivize solar and renewable energy. Shares of Jabil have slumped about 10% this year, while Flex has outperformed the market and gained more than 44%. Visa is another potential winner in a Democratic sweep that poised to benefit from the likelihood of a higher corporate tax rate, according to analyst John Davis. “A Democratic sweep would likely enhance regulatory scrutiny across banks and large cap technology, which historically has results in outperformance by large cap fintech as these stocks tend to be hiding places for both tech and financial portfolio managers,” he wrote. Split scenarios Raymond James views some companies as beneficiaries even in a split government outcome. For Democrats, that would mean Harris as president, a split House and a Republican Senate. In a split government under Trump, it translates to a Democrat-led House and predominantly Republican Senate. The firm views Microsoft as one of those potential winners. While the company may face regulatory scrutiny surrounding AI and its size, analyst Andrew Marok views split government as an optimal outcome that would prevent any party from establishing a “regulatory agenda to the fullest extent.” AI chip giant Nvidia is another likely winner in both split scenarios and a Republican sweep. The firm expects the chip behemoth to benefit from Trump’s relationship with Saudi Arabia and chip selling in the region. Shares have rallied more than 149% this as the company capitalizes on AI tailwinds. NVDA YTD mountain Shares this year A mixed government under Trump could also bode well for shares of Verizon by loosening merger scrutiny and increasing the likelihood of its acquisition of Frontier. However, a split government under Harris would benefit competitor AT & T . The firm also thinks a Harris victory would lead to more antitrust scrutiny in the telecommunications space, and impact T-Mobile’s purchase of U.S. Cellular’s wireless business. Heightened antitrust controls over Google and its local search monopoly in a Democrat sweep and split Harris government should also benefit shares of Yelp down 27% this year. Republican sweep Raymond James views Salesforce as a potential big winner in a Republican sweep, noting that “more favorable” corporate tax rates should benefit cyclical software names. The outcome could also post a boon for shares of Apple , up 17.6% this year. Other big winners include shares of analog semiconductor suppliers such as Texas Instruments . The sector should also be protected from tariffs and trade restrictions and benefit from lower tax rates, the firm said. Payments companies such as Shift4 Payments may also see tailwinds from a Trump win by easing regulatory fears and lead investors to move out of large fintech stocks and into banks and technology names, said Davis. “However, overall economic activity could increase as we expect lower taxes and greater inflationary spending,” he wrote. “Given this, we favor names with meaningful macro exposure that would significantly benefit from increased spending and higher inflation. Winners in every scenario CrowdStrike and Datadog could win big regardless of the presidential outcome. Analyst Adam Tindle views cybersecurity and IT operations as “critical” no matter the election outcome. He also expects stocks with higher valuations to benefit in a lower-interest rate environment with more risk appetite. Shares of CrowdStrike have gained 13% this year, bouncing back after a software update shuttered flights and caused one of the biggest IT outages this summer. Datadog shares have slumped more than 3 in 2024%. Beyond the software sector, the firm views Intel as a key winner poised to benefit from growing support for American semiconductor companies and the subsidies provided through CHIPS Act funding. Intel’s stock has shed more than half its value this year as the chipmaker grapples with market share losses and struggle to gain a foothold in AI. Recent reports have swirled that Qualcomm is weighing a takeover of the company, while Apollo Global Management has weighed an investment. Megacaps Alphabet and Meta Platforms should benefit regardless of the outcome for a range of reasons. Analyst Josh Beck noted that a likely TikTok ban should bode well for both companies by forcing advertisers to redistribute spending. A Republican win would also mean a more “hands-off” approach to AI regulation. The firms named Arista Networks among the communication equipment stocks that should bode well in any government outcome, and poised to benefit from the early stages of the artificial intelligence infrastructure buildout and heightened enterprise adoption.
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