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Tech Sector ETFs Set to Rule Under Trump's Second Term?

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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 - Free Report) CEO Mark Zuckerberg, Amazon (AMZN - Free Report) CEO Jeff Bezos, and Alphabet (GOOG - Free Report) 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 - Free Report) 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 - Free Report) , Technology Select Sector SPDR Fund (XLK - Free Report) , iShares U.S. Technology ETF (IYW - Free Report) , Fidelity MSCI Information Technology Index ETF (FTEC - Free Report) and iShares Expanded Tech-Software Sector ETF (IGV - Free Report) .

 

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