Stocks to Watch: How Trump’s Presidency Could Boost the AI Sector
Following one of the most heated elections in U.S. history, Donald J. Trump is now the President-elect. As potential changes loom, investors are actively seeking stocks poised for growth in the upcoming years.
In recent years, one major driver of market changes has been the swift adoption of artificial intelligence (AI). This tech is expected to launch a fourth industrial revolution, automating routine tasks and enhancing productivity to improve profit margins.
Although the adoption of AI is still in its infancy, experts predict it could add trillions to the global economy, translating to significant financial gains for industry leaders.
Let’s explore high-growth stocks that analysts believe will thrive under Trump’s leadership.
Image source: Getty Images.
1. Microsoft
Microsoft (NASDAQ: MSFT) has capitalized on the potential of AI early on. By heavily investing in OpenAI, the firm behind ChatGPT, it developed Copilot—a suite of digital assistants driven by generative AI. According to CEO Satya Nadella, these tools have been embraced by customers across various sectors.
For instance, the Microsoft 365 Copilot improved productivity for one company by saving an average of three hours per employee each week for 68,000 staff members.
This success has propelled the growth of Azure, Microsoft’s cloud service, which saw a remarkable 33% increase year over year, with AI services contributing 12 percentage points to that growth. The company provides popular AI models to its cloud customers.
Since the start of last year, Microsoft’s stock has surged 74%, coinciding with the explosion of AI’s popularity. Analysts at UBS forecast that AI adoption will continue, driven partly by Trump’s presidency, with Microsoft poised to benefit significantly.
2. Palantir
Palantir Technologies (NYSE: PLTR) has been an AI pioneer for over two decades. Its new generative AI platform has investors excited, leading to a stock price increase of 765% since last year.
A key offering is their “boot camp” sessions, where customers collaborate with Palantir engineers to enhance their AI initiatives. Management reported signing 104 deals worth at least $1 million during the third quarter alone, highlighting the demand.
Palantir’s U.S. commercial revenue jumped 54% year over year, with its customer count increasing by 77%. According to Wedbush analyst Dan Ives, the incoming Trump administration could bring major AI projects, especially within government sectors such as the Department of Defense, which would benefit companies like Palantir.
3. Tesla
Tesla (NASDAQ: TSLA) is known primarily as an electric vehicle (EV) manufacturer, but it is also a significant player in AI. The firm has seen substantial stock growth in 2023, fueled by its extensive data collection from vehicles in use, all aimed at advancing self-driving technology.
Currently, Tesla boasts a data advantage with 1.3 billion miles driven in fully self-driving mode, a feat unmatched in the industry.
CEO Elon Musk’s connections with Trump, including campaign support, signal potential regulatory advantages for Tesla’s autonomous strategies. Notably, after Trump’s election, Tesla’s stock climbed nearly 15%.
However, analyst Dan Ives cautions that a Trump presidency might hinder the broader EV market due to the termination of rebates and incentives. Nonetheless, Tesla’s unmatched scale positions it favorably, especially as higher tariffs on imports could disadvantage foreign competitors.
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*Stock Advisor returns as of November 4, 2024
Danny Vena has positions in Microsoft, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Microsoft, Palantir Technologies, and Tesla.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
