As we inch closer towards completion of vote counts in the closely fought 2020 presidential elections, Wall Street has its preference and best-case scenarios. But, in most likelihood, most top-tier companies — Amazon, Google, Apple, Facebook, Tesla — will do well under Biden or Trump.
As Americans wait for the results, challenger Joe Biden seems poised to reach 270 with likely wins in Wisconsin, Michigan, Arizona and Georgia. Wall Street and tech companies probably prefer a Trump presidency. But the likes of Amazon, Google, Microsoft, Tesla and Facebook have such momentum and enjoy such market dominance that they should do well irrespective of who wins the presidential elections.
But the final decision will take a few more days. Things may end up in court but it remains to be seen if the U.S. Supreme Court will intervene.
How is Wall Street reacting so far?
Some investors and executives said that if Mr. Biden won, it would restore civility to the White House and bring more attention to issues like racial injustice. At the same time, Republicans in the upper house, led by the majority leader, Mitch McConnell, would be able to block parts of a liberal policy agenda that most worry Wall Street, such as tax increases, health care reform and closer scrutiny of the power of giant technology companies.The New York Times
Stocks Under Trump vs. Stocks Under Biden
How will various stocks perform under a Biden presidency versus under a re-elected Trump?
The economy has seen unprecedented downturn and job losses because of the Covid19 pandemic. The positive cases are again growing. Countries in Europe are entering a second lockdown.
To some extent, the economy would have suffered equally under either party’s president. Under Trump, stocks have done well thanks to tax cuts for the wealthy.
Looking to the future, under a second term of President Trump, the plan is unclear. At best, we’ll see more of the same. Which means stock markets would gain and Jeff Bezos, Elon Musk, Mark Zuckerberg, Larry Page, Sergey Brin, and other mega-billionaires would continue to grow wealthier.
The general economy may remain anemic.
Under a Biden presidency, there is likely to be a shift. These might be broadly under six heads:
- climate legislation/boost to renewable energy such as solar and wind
- workers rights legislation
- increases in minimum wages
- higher taxes on the wealthy
- higher taxes on big corporates
- healthcare laws
With these differences in mind, which technology companies will gain under Trump and which might do well under Biden?
Let us analyze the impact of Presidential election results on Amazon, Google, Microsoft, Facebook, Tesla, And Twitter
Amazon: Trump or Biden
Summary: A Trump win will probably benefit Amazon more.
Amazon’s juggernaut is probably unstoppable under either scenario as Amazon has extraordinary competitive advantages. It has become the behemoth it has over decades. It is not going to disappear in a few years.
Amazon actually irritates Trump. More precisely, Jeff Bezos ‘rankles’ Trump because Bezos owns The Washington Post. WaPo’s reporting has not been to Trump’s liking. It’s not like WaPo is ‘anti-Trump’; it’s just that WaPo is ‘pro-truth.’ WaPo has listed more than 20,000 lies uttered by Trump.
Trump thus wants to hurt Bezos to take revenge. Trumps wants to use the US Postal Service to put hurdles before Amazon but that has not succeedd yet.
Amazon has faced labor unrest. Amazon’s low wages and working conditions have been controversial. A Biden presidency may translate into higher minimum wages or tougher regulations regarding working conditions.
But that’s really a big ‘if.’
Truth is, Amazon will probably do swimmingly under either man as president. Bezos has come a long way in the last 10 years but he doubtless has ‘miles to go’ before he sleeps.
Apple: Biden or Trump
Summary: Apple is too big and too successful to be too worried about the outcome of the presidential election.
At the beginning of his presidency, Trump complained about Apple’s manufacturing of iPhones in China. Trump even asked Americans to boycott Apple until it brought manufacturing back to America. Apple even did bring some manufacturing back.
Those days have disappeared in the rear-view mirror. Americans have accepted outsourcing as a fact of life.
Apple has continued to make larger profits than ever before. It is now the largest company by market cap in the world. It is the only company whose market cap has gone past 2 trillion dollars.
In the recently released 4Q2020 results, Apple saw a dip in iPhone revenue but made up for it by outsize sales and growth in iPad and Mac revenue. Demand for the recently launched iPhone 12 is said to be skyrocketing as well.
The only clouds in the sky for Apple are its deal with Google and the European Commission’s taking of a dim view of Apple’s tax arrangements in Ireland. But those clouds shall probably pass. Tim Cook has done a stellar job as CEO and Apple has seen phenomenal growth under his leadership.
A Biden presidency won’t cause too much of headwinds for Apple though there is some risk of corporate tax increases. But a divided US government suits Apple and others. A Biden presidency won’t be able to legislate radical tax reforms as long as Republicans have a majority in the Senate.
Google: Trump or Biden
Summary: A Trump win is said to favor large multinational companies in general but a Biden win may not affect Google’s status or profitability that much.
This two-decade-old company dominates online search and online advertising just like Microsoft used to dominate in personal computer operating systems once upon a time.
The US government has now decided to file an antitrust suit against Google. That suit has been long in the works and it will take several years for the suit to reach any conclusion.
Google’s profits are large though it has not faced action in Europe like Apple has. Google may benefit under a Trump presidency as corporate taxes are likely to remain low in general under him. On the other hand, H1B visa restrictions under Trump probably hinders Google.
Under President Biden, things may be reversed. H1B visa policies may be liberalized under Biden while tax rates may increase.
In either case, an actual break-up of the company is unlikely and profits will probably keep increasing.
Microsoft: Biden or Trump
Summary: Microsoft is in the same boat as the other companies featured here. Its fortunes too will likely continue to rise and shine under Trump or Biden.
Microsoft’s latest revenue and profits are quite impressive. This has been trendline maintained by Microsoft for several years now. While Bill Gates is busy with philanthropy work, Satya Nadella has shown himself to be quite the capable CEO.
Microsoft has shown itself to be one indispensable player in cloud services with its Azure brand. Microsoft Azure is second only to Amazon’s Web Services (AWS).
Subscriptions to Office 365 are doing great. More are buying Microsoft XBox gaming devices.
Some of this has been aided by the Covid19 pandemic. But the trendlines will endure after the pandemic is over. So one can continue to expect handsome profits from Microsoft.
Corporate tax rates and visa rules affect technology companies more or less similarly. What applies to Google above also applies to Microsoft.
Facebook: Biden or Trump
Summary: Facebook’s fortunes will prosper as long as people are attracted to social media.
Zuckerberg is probably not going to take early retirement so soon. It is safe to assume he will be in the thick of things in the next four years whoever the president may be.
Trump’s improbably win in 2016 hinged a lot on a smart Facebook-centered campaign. Facebook has been a primary means of communication for right leaning supporters of Trump as most mainstream media outlets tend to be left-leaning.
Trump is unlikely to harm Facebook, a platform that his supporters depend upon.
Facebook may amplify the echo-chamber effect by showing its users posts that they are likely to like. But that is fine for Trump.
Though Biden has not taken some of the extreme stands taken by other Democrats such as Elizabeth Warren, the Senator from Massachusetts, regulations may become tougher under him. But with a divided Congress, it may be difficult to enact partisan or legislation that doesn’t have bipartisan support.
Most likely, Facebook will continue to remain the most important social media platform in the world. Just a day after the election, the stock markets are up and billionaires including Zuckerberg are back to gaining billions.
Tesla: Trump or Biden
Summary: Tesla’s Fortunes May be Brighter Under Biden if Green New Deal Legislation Becomes A Reality
Radical climate legislation such as the Green New Deal will benefit Tesla Motors. But it is already doing well. States such as California have announced dates after which only electric vehicles will be allowed to be sold.
The Federal government continues to subsidize electric vehicles from Tesla and others.
Tesla’s stocks have done phenomenally well propelling Elon Musk to the third place on the list of the richest people in the world. Elon Musk has outsize plans about ‘colonizing’ Mars. He is not going to get ‘throttled’ under either Trump or Biden.
While Trump may be skeptical of climate change and supportive of fossil fuels, Tesla is likely to prosper anyhow.
Trump has taken to Twitter like ducks to water. He tweets with a vengeance at all times of the day and night. He has tweeted various colorful insults. Trump has tweeted policy — policy by Twitter or rule by Twitter. He has claimed that Twitter has allowed him to bypass mainstream or traditional media. Trump claims traditional media has been “unfair” to him.
Now he has made claims on Twitter about winning which Twitter has chosen to hide. Trump’s post-Election Day tweets show the mutually beneficial, symbiotic relationship between Trump and Twitter. Trump benefits from Twitter by having a platform that lets him send out his ‘message’ directly to his supporters, to his base and to the world at large directly. Twitter benefits as more people log into Twitter to either support Trump or outrage at his shenanigans and misrepresentations.
Under Biden, Twitter may become a more boring place with fewer people logging in to check on the latest controversy.
Banking stocks will generally tend to perform well under President Trump. His administration is likely to favor banks with lower taxes and less regulation. Under President Biden, one can expect higher taxes. Elizabeth Warren is a prominent advocate of not only breaking up Facebook but imposing more stringent controls on big banks. She may be a part of a Biden administration.
So the likes of JP Morgan Chase and Bank of America might favor a Trump administration. However, any changes to the law may be difficult, especially far-reaching changes, in the absence of a Senate majority for the Democrats even in a Biden administration.
Companies like Brookfield Renewable Partners might benefit under a Biden administration push for faster transition to renewable energy sources.
Joe Biden’s campaign site says:
From coastal towns to rural farms to urban centers, climate change poses an existential threat – not just to our environment, but to our health, our communities, our national security, and our economic well-being. … Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face.
How much actual policy can one expect? Probably not much though. In fact, “even if Biden wins the White House and Democrats lead Congress, the combined opposition from the party’s moderate wing and from Republicans should make it difficult to push through transformational fiscal programs, such as the Green New Deal and Medicare for All,” writes the Wells Fargo Investment Institute.
But it’s still safe to assume that green energy and infrastructure will be a priority under a Biden administration.
It is not like the U.S. government is going to write Brookfield a check. But a rising tide lifts all boats, and increased spending in this space is likely to boost Brookfield’s (and others’) bottom line.
Another renewable energy company that might do well under President Biden is NextEra Energy in Florida where it generates 15,000 megawatts of wind energy making it the world’s largest producer of wind and solar energy.
Another beneficiary of a Biden presidency may be First Solar, which is a leading manufacturer of solar panels. While China leads the world in solar panels, there is probably scope for a home-grown competitor to do well.