Tech executives could also be warming to Donald Trump’s return to the White House as his quick win sparks optimism for more spending and dealmaking.
“Business does rather a lot higher when uncertainty goes away,” IBM (IBM) CEO Arvind Krishna told me at Yahoo Finance’s Invest conference. “We’re hopeful that there may be going to be rather a lot more innovation and fewer regulation. Those are each good for businesses across the board.”
Krishna believes a lighter regulatory environment will prompt clients to make investment decisions more quickly and likewise lay the groundwork for a more favorable deal environment.
“If we’ve more certainty on the end result, then we’re willing to lean into things like M&A … If the regulatory process and antitrust are going to be more certain, that permits you to take more risk,” Krishna added.
A shift toward less regulation can be a dramatic change for the industry, which has faced intense scrutiny from the Biden administration. Under FTC Chair Lina Khan’s leadership, regulators aggressively pursued cases against the industry’s biggest firms, including Amazon (AMZN), Apple (AAPL), Meta (META), and Alphabet (GOOG, GOOGL).
Trump, however, has promised to chop excess red tape, including his promise to throw out Biden’s executive order geared toward putting safety guardrails on AI — a move that will be viewed as controversial by those throughout the industry.
While Trump’s antitrust agendas remain uncertain, there appears to be growing optimism that he’ll employ a more hands-off approach in comparison with Biden.
“We expect tech stocks to rally further into year-end because the Street further digests a less regulatory spider web under Trump with Khan/FTC days within the rear view mirror, stronger AI initiatives throughout the Beltway on the best way, and a goldilocks foundation for Big Tech and Tesla looking into 2025 and beyond,” Wedbush’s Dan Ives wrote in a recent note to clients.
Cisco (CSCO) CFO Scott Herren is confident in the corporate’s momentum heading into 2025. He told me on Yahoo Finance’s Catalysts that he feels “really good” about Cisco’s position, noting “strength across the board.”
“It’s hard to predict what is going on to occur from a political standpoint, but once you have a look at the things which might be going to drive government efficiency, we have got the Department of Government Efficiency (DOGE) that is about increasing productivity, and technology is all the time going to be critical to increasing productivity,” Herren said.
Despite optimism from tech leaders, investor sentiment seems a bit more cautious. Performance of the Magnificent Seven stocks, outside of Tesla (TSLA), has been lackluster since Election Day, hampered by risks related to a stronger dollar and more tariffs.
