Tech Stocks Poised for 'Santa Rally' Amid AI Boom and Potential Regulatory Shifts

Expect Santa Tech rally into year-end, Wedbush says By Investing.com

Investing.com -- Wedbush analysts expect tech stocks to end the year strongly with a "Santa rally," citing positive catalysts including deregulation under Donald Trump's second term and stronger AI initiatives. The investment bank anticipates a 20% or more surge in the technology sector by 2025, driven by the "AI revolution and a $1 trillion+ of incremental AI cap-ex over the next 3 years." Wedbush believes that significant AI initiatives will emerge from the Trump administration next year, which could substantially benefit major tech companies such as Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOGL). The firm also foresees the Department of Defense (Dod) and other federal agencies playing a pivotal role in bolstering AI development, positively impacting companies like Palantir (NASDAQ:PLTR) and Oracle (NYSE:ORCL). "While the Inflation Reduction Act would see some major changes/revisions under a Trump Administration which would be a negative for Intel (NASDAQ:INTC) and others, the focus on AI will be front and center in our view and benefit Big Tech," analysts led by Daniel Ives said in a note. Moreover, the potential departure of Lina Khan from the Federal Trade Commission (FTC) is seen as another positive development for the tech industry. Khan's exit, considered likely under a Trump presidency, is expected to catalyze more deal flow and remove a significant barrier that has challenged tech sector deals, including the recent broader investigation into Microsoft. Tesla (NASDAQ:TSLA), in particular, stands to gain from a Trump victory, according to Wedbush. Although the electric vehicle (EV) industry might face challenges with the removal of tax incentives and rebates, Tesla's unmatched scale and scope could provide it with a distinct competitive edge in a non-subsidy EV market. In addition, higher tariffs on China could hinder Chinese EV manufacturers from entering the US market, further benefiting Tesla. "Trump could also accelerate some of the FSD and autonomous initiatives for Tesla once he is in the White House," analysts noted. This fast-tracking is anticipated to be a central focus for investors, and Tesla's 2026/2027 goals could be accelerated to stay on track with the China timeline. "We believe a Trump White House helps unlock the $1 trillion of autonomous/AI value to Tesla's stock as autonomous/FSD is likely accelerated starting in 2025 and a tailwind for Cybercab timing," Wedbush concluded.

Tech Stocks Set For Strong Santa Rally As Wall Street Looks For An End To 'Regulatory Spider Web' In The Trump Era, Says Dan Ives - Grayscale Bitcoin Mini Trust (BTC) Common units of fractional undivided beneficial interest (ARCA:BTC)

Major technology stocks are positioned for a strong year-end rally as artificial intelligence initiatives accelerate and regulatory pressures ease under President-elect Donal Trump, marking a potential end to Federal Trade Commission Chair Lina Khan's aggressive oversight of Big Tech companies according to Wedbush Securities Managing Director Dan Ives. What Happened: "We expect tech stocks to be strong with a Santa rally as the Street further digests a less regulatory spider web under Trump with Khan/FTC days in the rearview mirror, stronger AI initiatives on the way, and a goldilocks foundation for Big Tech and Tesla into 2025," Ives wrote on X. The forecast comes amid projections of unprecedented AI-related spending reaching $1 trillion by the end of 2025. JPMorgan echoes this optimistic outlook, projecting the United States to lead global growth in 2025. The financial giant highlights the Magnificent 7 tech companies - Amazon.com Inc. AMZN, Microsoft Corp. MSFT, Meta Platforms Inc. META, NVIDIA Corp. NVDA, Alphabet Inc. GOOGL GOOG, Tesla Inc. TSLA, and Apple Inc. AAPL - planning combined investments exceeding $500 billion in capital expenditure and R&D. See Also: Bitcoin, Dogecoin Move Up, Ethereum Steadies As Traders Prepare For Crypto's Final 2024 Flourish -- Will BTC Hit $100K In December? Analyst Explains Why It Matters: However, Morgan Stanley's chief U.S. equity strategist Mike Wilson urges caution, describing the S&P 500 as "extremely expensive" at 23 times forward earnings. The firm projects a 5% contraction in valuation multiples for 2025, despite anticipated earnings growth. The technology sector's trajectory may also be influenced by potential regulatory shifts in cryptocurrency markets. Reports suggest the incoming Trump administration plans to transfer oversight of Bitcoin BTC/USD and Ethereum ETH/USD spot markets to the Commodity Futures Trading Commission, potentially reshaping the $2.24 trillion digital asset landscape. Read Next: Jeep Marker Stellantis' CEO Carlos Tavares Resigns Amid Falling US Sales And Trade Pressures: Board Cites 'Different Views' Image Via Flickr Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs