AI Stocks and ETFs Rally Amid Political Uncertainty and Technological Advancements

AI Stocks & ETFs to Rally on Likely Harris Trade?

On Jul 22, 2024, U.S. tech stocks surged following President Joe Biden's withdrawal from the presidential race, with the S&P 500 and Nasdaq Composite rising over 1% and 1.6%, respectively. This recovery came on the heels of considerable losses the previous week amid a rotation out of large-cap names when "Trump Trade" took place. However, this week, NVIDIA NVDA has led a tech recovery, with the sector gaining more than 4.5%. The artificial intelligence (AI) rally seems to be gaining momentum all over again. Presidential Hopeful Harris to Boost AI Stocks? Following Biden's endorsement of Vice President Kamala Harris as the Democratic nominee, Democratic leaders rallied around Harris, including endorsements from figures like Nancy Pelosi. Harris, known for her involvement in AI policy, could bring increased focus on technology issues if elected, building on initiatives like the government's AI executive order. Her Silicon Valley connections and endorsements suggest strong support from tech circles. Before entering politics, Harris was San Francisco's first female district attorney and later, she became California's first female attorney general, the Los Angeles Times reported. During her career as a prosecutor, Harris launched a data transparency project called OpenJustice. In 2016, Harris was elected to the U.S. Senate where she announced a bill called the Digital Service Act. Market Reaction to Harris' Presidential Hopefulness Some of the so-called Trump trades backtracked slightly Monday. The Treasury yield curve flattened and the dollar dropped. Tech stocks rallied. Investors should note that the AI rally has been one of the most notable developments amid the Biden-Harris leadership. So, if Harris runs the presidential election now and manages to show considerable chances of winning, the AI rally should continue. ETFs in Focus The most notable winner is likely to be "Magnificent Seven," which includes Apple, Microsoft, Alphabet, Meta, Amazon, NVIDIA and Tesla. We expect the section to fare better in the coming days as a likely low-rate environment is beneficial for high-growth tech stocks, too. Roundhill Magnificent Seven ETF MAGS is a likely winner if the AI rally continues (read: ETFs That Gained on Mag 7's Worst Day in a Year). With AI technology rapidly advancing and becoming increasingly integral to various industries, investors must be looking for ways to capitalize on this trend. Hence, apart from MAGS, investors can keep a close tab on ETFs like Global X Robotics & Artificial Intelligence ETF BOTZ, iShares Robotics And Artificial Intelligence Multisector ETF IRBO, First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT and Themes Generative Artificial Intelligence ETF WISE. Want key ETF info delivered straight to your inbox? Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Global X Robotics & Artificial Intelligence ETF (BOTZ): ETF Research Reports Roundhill Magnificent Seven ETF (MAGS): ETF Research Reports First Trust NASDAQ Artificial Intelligence and Robotics ETF (ROBT): ETF Research Reports iShares Robotics and Artificial Intelligence Multisector ETF (IRBO): ETF Research Reports Themes Generative Artificial Intelligence ETF (WISE): ETF Research Reports The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

What a Trump Win Could Mean for Tech and AI Stocks

Following former president and Republican presidential nominee Donald Trump's recent comments about increasing China tariffs and his stance on Taiwan -- who, per Trump's statement in a Bloomberg interview, "did take about 100% of our chip business" -- tech and artificial intelligence (AI) stocks were sent on a roller coaster. Check Out: Social Security: How Big Is Senator Lindsey Graham's Social Security Check? Read Next: 6 Unusual Ways to Make Extra Money (That Actually Work) As Dan Ives, Wedbush Securities analyst wrote in a subsequent statement, the tech sell-off was "brutal" and Trump's comments "catalyzed a Street panic for semis, AI Revolution names, and Big Tech." These sectors have since recovered but Nvidia stock, for instance, was knocked down that day, as well as Taiwan Semiconductor Manufacturing Co. -- "the world's biggest contract chip maker," according to The Wall Street Journal. Nvidia for instance was down 0.29% midday July 23, yet is up an eye-popping 155.7% year-to-date. "Trump's ominous China comments this week sparked major worries that a looming semi/tariff battle is on the horizon with China that will stop the music at the AI party," wrote Ives in the statement. Yet Ives added that this won't stop the "AI party." Now whether this was just a blip or a harbinger of things to come and of the future direction of said AI and tech stocks remains to be seen and could hinge on other factors, several experts said. "The main driver has less to do with the election and more to do with expectations for the Fed's next interest rate cut," said Vijay Marolia, founder and chief investment officer of Regal Point Capital Solutions. Could a Trump Win Ruin the "AI Revolution" or Further Bolster These Sectors? According to Peter C. Earle, Senior Economist of American Institute for Economic Research, the first and most important factor to mention when considering what will happen to U.S. stocks if a particular candidate gets in office is to note their current position. Earle argued that even having pulled back a little over the past month, stock prices and valuations are very high right now, so there's a growing chance that the market needs a breather before it can resume rising. "That's even more likely to be the case considering that a large part of the recent rise has been on the backs of six or seven stocks, with a large portion of the universe of equities having prices that are flat or slightly lower than they were at the start of 2024," he said. Yet, he also added that the tariff talks and protectionism that are a main feature of the Trump campaign does put future gains in AI stocks somewhat into question. "To the extent that at the core of the AI market are chip manufacturers, some of which may be in China, there will be lots of tensions there," Earle added. AI Innovation Won't Stop No Matter Who Wins -- But Expect Some Volatility As Ives noted, the "Trump trade" does not ruin the AI Revolution thesis and tech bull market and to some extent it's just a negotiation that will be a long and drawn-out process." Several experts agreed with this premise, saying that the momentum in tech and AI is going to be hard to stop, no matter what happens in November. "While a few big names in the tech community started publicly backing Trump over the past few weeks, the tech world also has been thriving under the Biden-Harris administration," said Blane Sims, Head of Product at Truebit. "So outside of some very specific regulatory questions, it's hard to make a case that tech is going to go in a different direction based on the election." BlackRock analysts also noted in a July 22 commentary that "any trade or regulatory policy changes after the U.S. election in November that restrict the AI buildout could hurt tech, too." Yet, they also added that they remain "overweight the AI theme -- and for now see sudden pullbacks as an opportunity to dial up risk-taking." "This environment requires a new investment playbook," they added. What Should Investors be Mindful Of? As Regal Point Capital Solutions' Marolia said, "trees don't grow to the sky so I would continue to expect volatility in the short term." "But as we get closer to having certainty about another Trump presidency, I think stocks will rally, including tech and AI," he said. "I think an investor with a long-term horizon will be able to scoop up shares of Nvidia, Super Micro Computer, Broadcom and others at attractive prices over the next few days and weeks." Other financial experts -- such as Michael Collins, CFA, Founder and CEO, WinCap Financial -- echoed the sentiment, noting that with a Trump win, tech and AI stocks may be at risk in the short-term due to potential changes in regulations. "However, their long-term momentum should not dissipate as the demand for technology and AI solutions is expected to continue growing," he said. "It could be a great buying opportunity for investors who believe in the long-term growth of the sector and are willing to ride out any short-term volatility." Collins also said that investors should be mindful of any changes in policies or regulations that could impact the sector in the long-term, as well as potential economic downturns that could affect consumer spending on technology products. Editor's note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com. More From GOBankingRates This article originally appeared on GOBankingRates.com: What a Trump Win Could Mean for Tech and AI Stocks The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.