Tech executives may be excited about Donald Trump’s return to the White House as his quick victory raises optimism about more spending and deal-making.
“Business does much better when uncertainty disappears,” IBM (IBM) CEO Arvind Krishna told me at Yahoo Finance’s Invest conference. “We are hopeful that there will be much more innovation and less regulation. Both of these are good for companies across the board.”
Krishna believes that a lighter regulatory environment will encourage customers to make investment decisions faster and will also lay the foundation for a more favorable deal environment.
“If we have more certainty about the outcome, then we are willing to focus on things like mergers and acquisitions… If the regulatory process and antitrust law will be more certain, you can take more risk,” Krishna added.
A shift to less regulation would be a dramatic change for the industry, which has faced intense scrutiny from the Biden administration. Led by FTC Chair Lina Khan, regulators have aggressively brought cases against the industry’s largest companies, including Amazon (AMZN), Apple (AAPL), Meta (META), and Alphabet (GOOG, GOOGL).
Trump, on the other hand, has pledged to cut excess red tape, including his pledge to reject Biden’s executive order aimed at putting in place safety rails for AI — a move that would be seen as controversial by those within the industry.
While Trump’s antitrust agendas remain uncertain, there appears to be growing optimism that he will take a more hands-off approach than Biden.
“We expect tech stocks to continue to rise through the end of the year as the Street continues to digest a less regulatory spider web under Trump with Khan/FTC days in the rearview mirror, stronger AI initiatives within the Beltway on the way, and a Goldilocks base for Big Tech and Tesla are looking to 2025 and beyond,” Dan Ives of Wedbush recently wrote in a letter to customers.
Scott Herren, CFO of Cisco (CSCO), is confident about the company’s momentum heading into 2025. He told me on Yahoo Finance’s Catalysts that he feels “really good” about Cisco’s position, noting that across the board is powerful.
“It’s hard to predict what’s going to happen from a political point of view, but if you look at the things that are going to drive government efficiency, we have the Department of Government Efficiency (DOGE) which is concerned with increasing productivity, and technology will always be critical to increasing productivity,” said Herren.
Despite the optimism from technology leaders, investor sentiment appears more cautious. The performance of the Magnificent Seven stocks, excluding Tesla (TSLA), has been lackluster since Election Day, hampered by the risks associated with a stronger dollar and more tariffs.
That could change soon, Sylvia Jablonski, CEO of Defiance ETFs, told me. AI, which is “basically all the rage” on Wall Street, is still in its “infancy,” with huge growth potential ahead, he said.
And IBM’s Krishna echoed this sentiment, calling AI a key catalyst not just for IBM’s stock, but for the U.S. technology sector in general.
“Our customers’ AI spending will increase… And automation spending will increase… I think there will be more interest in American technology globally,” Krishna said. “There will be a lot more interest in investing in American technology from around the world.”
Since the start of the year, IBM shares are up more than 25%, surpassing the Nasdaq 100’s (^NDX) 20% gain.
Seana Smith is an anchor at Yahoo Finance. Follow Smit on Twitter @SeanaNSsmith. Tips about deals, mergers, activist situations or something else? Email seanasmith@yahooinc.com.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
