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On Wed, 24 Jul, 12:03 AM UTC
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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.
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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.
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AI-related stocks and ETFs are experiencing a surge, driven by technological progress and potential political shifts. The market is reacting to both current innovations and speculations about future policies.
The artificial intelligence (AI) sector has been experiencing a notable upswing, with AI-related stocks and exchange-traded funds (ETFs) showing remarkable gains. This surge is attributed to a combination of technological advancements and potential political developments that could shape the industry's future 1.
The rally in AI stocks is largely fueled by the rapid progress in AI technologies. Companies at the forefront of AI development are seeing increased investor interest as their innovations promise to revolutionize various sectors of the economy. This technological momentum is creating a positive feedback loop, where success breeds further investment and development 1.
Interestingly, the AI stock rally is also being influenced by political considerations. Speculation about potential changes in the political landscape, particularly the possibility of a Trump victory in the upcoming election, is adding another layer of complexity to the market dynamics. Investors are closely watching how different political outcomes might affect the AI industry and related regulations 2.
Major technology companies with significant AI investments are seeing their stock prices affected by these trends. Companies like Nvidia, Microsoft, and Google's parent company Alphabet are experiencing fluctuations as the market reassesses their potential in light of both technological and political factors 2.
Exchange-traded funds focusing on AI and related technologies are also benefiting from this rally. These ETFs offer investors a diversified exposure to the AI sector, allowing them to capitalize on the overall growth of the industry without the risks associated with individual stock picking 1.
The potential for new regulations in the AI sector is a key factor influencing stock performance. Different political outcomes could lead to varying regulatory environments, which could either boost or constrain AI development and deployment. Investors are factoring in these possibilities as they make decisions about AI-related investments 2.
The rally in AI stocks is also reflective of the global race in AI technology. As countries vie for technological supremacy, companies leading in AI development are seen as strategic assets, potentially influencing both their market valuation and government policies towards them 1 2.
As the AI sector continues to evolve, investors and analysts are closely monitoring both technological breakthroughs and political developments. The interplay between innovation, regulation, and market sentiment is likely to keep the AI stock market dynamic and potentially volatile in the near future.
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Donald Trump's election victory has sparked significant movements in AI-related stocks and raised questions about future AI policies. This story explores the potential implications of a Trump presidency on AI companies, regulations, and market trends.
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Wall Street analysts predict continued growth for AI and tech stocks in 2025, with a focus on software and broader AI applications beyond the 'Magnificent Seven'. The sector faces potential challenges from new tariffs and changing political landscape.
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Wedbush analysts predict a strong year-end rally for tech stocks, driven by AI initiatives and potential regulatory changes under a hypothetical Trump administration. The forecast includes significant AI-related spending and possible benefits for major tech companies.
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The AI technology sector experiences a rollercoaster of investor sentiment, with some stocks maintaining momentum while others face skepticism. Concerns over heavy spending and slowing earnings growth cast shadows on the industry's future.
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The upcoming US presidential election between Kamala Harris and Donald Trump could significantly impact AI regulation, investment, and the industry's future. Their contrasting approaches to AI policy highlight the stakes for tech companies, consumers, and America's global competitiveness in AI.
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