The Nasdaq-100 Index (NDX) surged 5.48% last week as investors digested the 2024 election outcomes. NDX, which is chock full of famed tech stocks, appeared to like the news. Of course, that was positive for the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM). Those exchange traded funds follow the NDX. Many tech companies and executives are at political odds with President-elect Trump. But the sector performed well during his first term.
And a sequel could be in store. That’s because it’s widely expected the incoming Trump administration is prioritizing artificial intelligence (AI). Moreover, it’s believed the next president isn’t focusing as much on AI regulations as he is ensuring the U.S. maintains and expands its status as the premier hub of AI innovation. That could be to the benefit of investors holding QQQ and QQQM because the ETFs are homes to a variety of AI-related stocks.
Policy Initiatives Matter
It remains to be seen how new AI policy will unfold. But some analysts believe the election outcome is favorable on that front.
“We would expect significant AI initiatives from the Beltway within the U.S. that would be a benefit for Microsoft, Amazon, Google, and other tech players,” wrote Wedbush analyst Dan Ives in a report out last week.
Those three stocks combine for about 18% of the QQQ/QQQM portfolios. Expectations are also perking up that Trump will favor policy that allows more defense companies to increase their embrace of AI. And that could have implications for some QQQ/QQQM holdings.
Predictably, Tesla (TSLA), the second-largest consumer cyclical holding in QQQ and QQQM, has been mentioned as a potential beneficiary of a second Trump term. That’s because founder and CEO Elon Musk actively supported the president-elect. And that’s despite the fact that Trump isn’t seen as a boon for the electric vehicle (EV) industry.
“However for Tesla we see this as a huge positive. Tesla has the scale and scope that is unmatched in the EV [industry. This] dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players from flooding the U.S. market over the coming years,” added Ives.
Proving it was responsive to the election results, Tesla soared 29% last week. It rejoined the $1 trillion market capitalization club in the process.
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