Technology equities have largely had a good year in 2024. The tech-heavy Nasdaq Composite has rallied nearly 20% on a year-to-date basis, and secular trends such as artificial intelligence and cloud computing technologies could send technology shares higher in the near term. Even the historical August slump probably will not be enough to stop the tech rally dead in its track. Recent macroeconomic data has pointed to a consistent decline in U.S. inflation, and a stubborn area of inflationary pressure – the labor market – has also been exhibiting signs of cooling.
However, what could send a jolt through equities markets is this year’s presidential election outcome. On the Democratic side, Vice President Kamala Harris will likely be the party’s nominee as current President Joe Biden dropped out of the race. Donald Trump secured his nomination to run as the Republican presidential candidate. Former President Trump has hinted at a number of policy shifts that might not benefit the three “Big Tech” stocks below.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is America’s crown-jewel in the electric vehicle (EV) space. However, in 2024, that EV maker has experienced a plethora of issues. Tesla’s first quarter results marked its first sales miss since 2020. In fact, the first quarter deliveries figure missed Wall Street’s estimates by 14%, clocking in at 386,810 vehicles. The American EV maker’s second quarter deliveries also declined, albeit slightly than analysts had been anticipating. The announcement of Tesla’s second quarter earnings report was also disappointing. Profits declined for a consecutive third quarter, although revenue beat expectations, increasing to $25.5 billion. Declining deliveries and profit do not spell any good news for America’s largest EV maker.
A Trump victory would not be a positive thing either. Former President Trump has pledged to cut back on EV subsidies, which, depending on how that is actually executed, could lead to even more waning demand on the consumer end for EVs. Trump is also open to the idea of Chinese EVs opening up factories in the United States, which could bring more competition on to the American EV maker’s doorstep.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) makes the second “Big Tech” stock that could take a big hit from a Trump presidency. The AI-focused chipmaker has, thus far, enjoyed an incredible rally. As of the end of Tuesday’s trading session, Nvidia’s share price surged 147.6% for the year. This jaw-breaking performance is on top of having already rallied 239% in 2023. The chipmaker has received unprecedented demand for its advanced GPU accelerators that can power complex artificial intelligence workloads. Nvidia remains the leading chipmaker in the field and even the nearest competitor – Advanced Micro Devices (NASDAQ:AMD) – is behind Nvidia’s latest chip series.
Some events that have caused Nvidia’s share price surge to stutter has been increasing trade tensions between the United States and China. China used to be a significant market for Nvidia, and even these days it is but to a lesser extent because of the export controls the United States has imposed on advanced chips. News that the U.S. was seeking even more comprehensive trade barriers sent many chip stocks, including Nvidia’s plummeting last week.
A Trump reelection will not cool down tensions and could make it even harder for Nvidia to even sell its less sophisticated chips to the country. Moreover, the more sanctions and export controls have so far had the effect of making China’s domestic chip sector not only less reliant on Western technology but also more resilient. That will likely not bode well for Nvidia in the long term.
Meta Platforms (META)
The final entry on this list is Meta Platforms (NASDAQ:META). Trump has had a very contentious relationship with social media. The Former President had been kicked off Twitter after the former president’s supporters stormed the U.S. Capitol in January 2021. Since the Elon Musk takeover, X has reinstated Trump’s account. Meta Platforms also followed suit and banned Trump from their platform as well. The ban lasted for about two years but has naturally created resentment from the former president. Following his ban, Trump has promoted alternative social media platforms. He launched his own platform, Truth Social, which the Trump Media and Technology Group (NASDAQ:DJT) operates, as a competitor to Facebook and other mainstream social media services.
Another Trump presidency will, of course, not mean the end of Facebook, but it wouldn’t be surprising if President Trump uses his influence to push Truth Social. In one way or another, more antagonism from a sitting president will likely not bode well for Meta’s share price, which is why it might take a big hit if Trump’s reelection bid is indeed successful.
On the date of publication, Tyrik Torres did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
