The “Magnificent Seven” stocks, which significantly drove the S&P 500’s 25% return in 2024, are seen by many on Wall Street as set to continue their upward trajectory under a new Trump administration. Trump’s campaign promises of deregulation, tax reform, and substantial investments in artificial intelligence (AI) have sparked optimism among investors.
Analysts like Wedbush’s Dan Ives predict a robust performance from tech stocks in 2025, spotlighting companies like Nvidia (NVDA), Microsoft (MSFT), Tesla (TSLA), and Alphabet (GOOGL, GOOG). Ives anticipates a 25% increase in tech stocks, attributing this growth to a less restrictive regulatory environment, enhanced AI initiatives, and a favorable economic climate for big tech and Tesla.
The tech industry has already begun aligning itself with the incoming administration. Meta (META), for instance, has decided to end its fact-checking program, a move seen as an olive branch to conservative critics, and has welcomed UFC’s Dana White, a known Trump supporter, to its board. Contributions to Trump’s inauguration fund from tech giants like Microsoft, Alphabet, Meta, and Amazon further illustrate this alignment.
Portfolio manager Joe Tigay from Rational Equity Armor Fund shares this optimism with YF, particularly highlighting Tesla, Palantir (PLTR), and Amazon (AMZN) as likely beneficiaries of the policy shifts. He points out Tesla’s position in the electric vehicle (EV) sector, Amazon’s versatility in navigating global trade issues, and Palantir’s focus on AI and cost efficiency as key factors.
IBM’s CEO, Arvind Krishna, also anticipates a positive shift, suggesting that less regulation and more innovation could lead to an increase in mergers and acquisitions, given a more predictable regulatory landscape.
However, this bullish outlook isn’t universally applied across all tech sectors. There are notable concerns for companies like Apple, which heavily relies on manufacturing in China. Analysts from MoffettNathanson and Morgan Stanley (MS) have raised alarms about potential tariff risks and a slowing Chinese market, which could adversely affect Apple and other hardware-focused tech firms. Craig Moffett from MoffettNathanson specifically warns of retaliatory tariffs from countries affected by U.S. policies, while Erik Woodring from Morgan Stanley estimates significant EPS downside for hardware companies if tariffs on Chinese imports are reinstated.
This scenario paints a complex picture for investors. While the policy environment under Trump 2.0 might favor many tech companies, particularly those in AI and cloud services, hardware manufacturers with significant exposure to international trade, especially with China, face potential headwinds. The overall sentiment remains cautiously optimistic, with a clear divide between software, AI-focused tech, and traditional hardware sectors in terms of expected performance in the near future.
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