Big Tech Traders Are in Wait-and-See Mode on Trump’s Second Term

(Bloomberg) -- Big Tech stocks have had a relatively muted reaction to Donald Trump’s election victory, as investors parse how his second term might play out. So far, many are reserving judgment.

There’s a multitude of new risks to consider. Tariffs on products from China and elsewhere could lead to a resurgence of inflation or disrupt supply chains for the likes of Apple Inc., while anti-immigration policies could potentially disrupt companies that use skilled worker visas. Trump’s personal dislike of Meta Platforms Inc. and Alphabet Inc. is also something investors in those stocks are worried about.

But there’s also a possible benefit for tech giants in a friendlier regulatory climate — especially those currently under antitrust pressure. Much has also been made of a potential artificial intelligence push by the new administration, which could have ripple effects through the tech sector. Top of mind for all, though, is the unpredictability of the President-elect — and how much of his campaign rhetoric will actually make it into policy.

These cross-currents have left most of the Magnificent 7 in a less-than euphoric mood. With the exception of Tesla Inc., which has surged more than 20% due to Elon Musk’s vocal support for Trump, none of the group has participated in a big way in the post-election stock market rally. Apple is up just over 2%, while Facebook parent Meta is up less than 1%. Amazon.com Inc. has fared better, gaining 6%. The Nasdaq 100 Index is up 3.3%.

As the dust settles after the election result, we asked Big Tech investors what they’re thinking about. Here’s what they’re saying:

Tiffany Wade, senior portfolio manager at Columbia Threadneedle:

“Tariffs are the biggest risk for parts of tech. Tariffs on imports from China can certainly impact prices for a number of products including consumer electronics and also some enterprise components like servers that are often manufactured in China. And then higher prices could potentially depress demand for those products.

We have seen some pressure on Meta and Alphabet since the election. I think part of that is concern about the rhetoric that he has made regarding those companies.”

Mark Luschini, chief investment strategist at Janney Montgomery Scott

“The market is looking at things through rose-colored glasses. It seems to be ignoring trade and tariffs. Some of this depends on what the priorities are. If the focus is on tax policy and deregulation, that will sort of act as a down payment of the move we’ve seen, and it could provide another boost to stocks. If Trump focuses on deportation and tariffs, that will become problematic for stocks.

I don’t think the market will swoon, or that there will be an a-ha moment, but if tariffs are a priority, we could experience a period of weakness as people adjust to that.”

Mark Foster, chief investment officer at Kirr Marbach & Co.

“The regulatory backdrop is clearly going to get better. The Trump administration has indicated that one of its key focuses will be in reducing regulation, which should be pretty much across-the-board positive for the market and the economy. I think Khan being gone from the FTC would be a huge plus. I think she’s pretty extreme, which gave everyone anxiety. That will be a plus for next year.”

Threats against Alphabet and Meta are “just talk at this point. He felt these internet companies had their thumbs on the scales against him, and he doesn’t take kindly to that. However, I don’t think anything like this will make it into policy.”

Kevin Walkush, portfolio manager at Jensen Investment Management

“Trump says a lot of stuff and he can be very contradictory. Words are one thing, actions are another. The dual edged sword on Google and Meta is that he doesn’t like them. They have platforms that he thinks didn’t put him the best light.

The thing that’s contra to that is that he wants to back off on the regulatory side. That’s a counter perspective to that. We’ll see.”

Robert Pavlik, senior portfolio manager at Dakota Wealth Management

“I don’t know how much universal tariffs remain a policy priority. There are still a lot of question marks. It would be a problem for semis, and for parts of the computer sector. But it wouldn’t necessarily sink the tech sector overall. There will still be demand. People aren’t going to give up their iPhones, though they will cost more.

I don’t think software faces much risk from tariffs, and the impact on hardware is to be determined. I have exposure to Nvidia, Broadcom, and Apple. I don’t know how tariffs will impact Nvidia, since the demand will remain there no matter what. Broadcom goes kind of hand in hand with that. I think that at Apple, Cook will take steps to keep the products from exploding in price.”

Adam Grossman, chief investment officer of global equity at Riverfront Investment Group:

“It’s still unclear a week after the election. I do think he could get tariffs through on China, but getting tariffs through on Europe, that’s another ball of wax.

For someone like Donald Trump, I think he’s going to have enough other issues that they’re going to kind of fly off of his radar.”