Trump’s Victory Sparks AI Stock Surge on Wall Street
The U.S. presidential election concluded with Donald J. Trump emerging as the president-elect. The absence of controversy around the election led to a significant rally on Wall Street, pushing the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite to record levels. This rally even carried into Thursday. Notably, companies leading in artificial intelligence (AI) saw substantial gains, as investors speculate that the new administration might favor AI advancements.
On this positive backdrop, chip foundry Taiwan Semiconductor Manufacturing (NYSE: TSM) surged 4.4%; social media and AI leader Meta Platforms (NASDAQ: META) increased 3.4%; and AI chip pioneer Broadcom (NASDAQ: AVGO) rose 2.6%, as of 1:22 p.m. ET on Thursday.
Reviewing typical sources like earnings reports, analyst ratings, and regulatory filings revealed no immediate company-specific news influencing these stock increases. This points to investors anticipating more favorable conditions for AI under the upcoming Trump administration.
Image source: Getty Images.
AI Stocks React to the Political Shift
While the excitement over the election outcome is apparent, broader factors are also at play for AI stock growth. Analysts have indicated that the incoming administration may favor AI developments, capturing the interest of investors.
According to Wedbush analyst Dan Ives, there is a strong expectation for a “robust AI focus” under Trump’s leadership, which would significantly advantage major tech companies, particularly those innovating in AI.
Ives highlighted a potential change within the Federal Trade Commission (FTC), led by Lina Khan, who has scrutinized many tech industry mergers and enforced antitrust regulations against prominent companies. Based on Trump’s pre-election comments, Ives believes Khan might be replaced, which he sees as a beneficial shift for big tech firms.
Analysts from UBS shared similar sentiments, positing that “big tech’s AI spending should continue to support the AI trade.” They further noted that both AI adoption and the financial returns from investments are on the rise among top cloud service providers.
Key Factors for Continued Success in AI
Beyond general trends, specific aspects make these three AI stocks prime candidates to benefit from the growing generative AI market. This technology can automate tedious tasks, leading to remarkable productivity gains. All three companies are driving innovation in this domain:
Generative AI is rapidly accelerating, with projections estimating its market value between $2.6 trillion and $4.4 trillion in the coming years, according to McKinsey and Company. If these companies can secure even a small piece of this market, their prospects look extremely promising.
Currently, Broadcom, TSMC, and Meta are trading at attractive valuations—specifically 29 times, 28 times, and 26 times their projected earnings, respectively.
Given the potential of the AI market and each company’s strategic positioning, they all represent viable investment opportunities.
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Randi Zuckerberg, a former director of market development at Facebook and sister to CEO Mark Zuckerberg of Meta Platforms, serves on The Motley Fool’s board of directors. Danny Vena holds shares in Meta Platforms. The Motley Fool maintains positions in and recommends Meta Platforms and Taiwan Semiconductor Manufacturing and endorses Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and may not reflect those of Nasdaq, Inc.
