President Donald Trump launched his second term with a series of executive actions that could have broad economic implications, and corporate leaders have taken note. At his inauguration, the key figures from the tech industry, including Meta META CEO Mark Zuckerberg, Amazon AMZN CEO Jeff Bezos, and Alphabet GOOG CEO Sundar Pichai, were seated in spots traditionally reserved for close family members and VIP guests.
The re-election of Donald Trump infused record highs for the technology and cryptocurrency markets in November.
Deregulation Sets the Stage for AI Growth
One of Trump’s first executive actions was to roll back regulations imposed by the previous administration on artificial intelligence (AI). By rescinding these restrictions, his administration aims to “clear a path for the United States to act decisively to retain global leadership in artificial intelligence,” according to an official executive order. This move is expected to fuel rapid advancements in AI innovation and development.
In fact, generative AI has surged in relevance since Trump’s first term. The Trump administration had previously made concerted efforts to promote AI. He signed the American AI Initiative executive order on Feb. 11, 2019. The order pledged to double AI research investment and established the first set of national AI research institutes.
The order also included a plan for AI technical standards and established guidance for the federal government’s use of AI. Trump also signed an executive order on Dec. 3, 2020, promoting the use of trustworthy AI in the federal government. It shows that AI stocks and ETFs should have great days during Trump’s ruling.
In January itself, President Donald Trump announced a $500 billion AI infrastructure initiative, spearheading a new company called Stargate. Initial funding for the project will come from SoftBank (SFTBY), OpenAI, Oracle (ORCL), and UAE-based MGX. This ambitious project is designed to accelerate AI research and development over the next four years.
Potential Market Impacts and Investor Sentiment
While some investors remain cautious about Trump’s broader economic policies — such as mass deportations, deregulation and tariffs — the tech sector appears to be among the primary beneficiaries of his second term. With both the House and Senate under Republican control, the administration is expected to push forward an aggressive pro-business agenda that could create a favorable climate for technology firms to expand and innovate.
Antitrust Regulation: Shift Away From Biden's Approach?
Under the Biden administration, antitrust measures targeted big players like Google, Amazon and Apple, with the FTC attempting to curb their market dominance. Trump, however, has indicated a more lenient stance on breaking up Big Tech. This could affect the ongoing cases against Big Tech, including efforts to break up Alphabet’s Google GOOGL due to its dominance in online search.
While Trump is likely to continue several antitrust cases against major tech companies — many of which began during his first term — he recently expressed skepticism about a potential Google breakup. In fact, in October, Trump questioned whether dismantling Google would harm the company too severely. Hence, overall, we can expect tech stocks to remain better-positioned in the Trump 2.0 era.
Tech ETFs in Focus
Hence, overall, we can expect tech stocks to remain better-positioned in the Trump 2.0 era. Investors can keep a close tab on exchange-traded funds (ETFs) like Vanguard Information Technology ETF VGT, Technology Select Sector SPDR Fund XLK, iShares U.S. Technology ETF IYW, Fidelity MSCI Information Technology Index ETF FTEC and iShares Expanded Tech-Software Sector ETF IGV.
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Alphabet Inc. (GOOG) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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