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Technology stocks were pounded following Donald Trump’s surprise win in the presidential elections. The concerns were real; Trump had been openly targeting the tech heavyweights during his election campaign, ranging from issues as wide as outsourcing and non-payment of taxes to hiring foreign employees.
Things have changed a lot since then, not that Trump has stopped targeting individual companies. However, Trump openly declared that he would like to help the tech industry in every way possible when he invited the tech giants to his tech meet in December 2016. (Source: “Donald Trump meets with tech leaders,” TechCrunch, December 14, 2016.)
Despite the concerns surrounding manufacturing overseas and possible trade frictions with China, there are a few positives for two technology giants—Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN). AAPL stock and AMZN stock are likely to benefit from Donald Trump’s promise of lower taxes on repatriation of overseas cash as well as a lower corporate tax rate.
AAPL Stock under the Trump Administration
Donald Trump is in favor of not only lower corporate taxes, but also for providing tax benefits to repatriate overseas cash. This is a big positive for Apple stock as the company has a big cash pile abroad, which can then be used by the company to buy back shares, pay dividends, and invest in research & development. This is likely to boost AAPL stock, which has been under pressure on declining “iPhone” sales.
Although Trump has clearly expressed that Apple should start building its products in the country, he had also conveyed to Apple CEO Tim Cook that he would provide a lot of incentives to Apple Inc. to do this. (Source: “Donald Trump’s New York Times Interview: Full Transcript,” The New York Times, November 23, 2016.)
While it is still wait-and-watch on that front, as Apple mulls the cost of shifting production, the company’s plans to diversify its revenue stream shall take Apple stock higher.
AAPL stock is hovering near its record high level of $120.00 and investors are focused on “Apple Services” as the major area of growth for the company in the future.
AMZN Stock under the Trump Administration
The lower tax on bringing back overseas cash helps Amazon stock as well, but more important than that, Jeff Bezos has been trying to mend fences with Donald Trump, which is good for Amazon.com, Inc. going forward. Amazon recently announced its plans to generate about 100,000 jobs in the U.S. for people with different types of skill sets and experience.
Generating employment in the country has been the prime focus of Trump’s election promises.
And it is not just about retail business. Amazon is getting into a lot more interesting industries that have huge potential for growth. Last month, the company announced its decision to expand “Amazon Prime Video” in about 200 countries and it is likely to do well as the company has the resources to become a dominant player in this field.
Amazon is getting into building its own delivery network to take on big logistics companies. This would help the company reduce costs and take more control of its deliveries. And a recent piece of news raises the speculation that Amazon may also be developing its own plans of self-driving vehicles.
There are reports that the company has been granted a patent that solves the problem of navigating reversible lanes. This is significant as autonomous vehicles could be a strategic addition to the company’s logistics fleet management. (Source: “Amazon patent hints at self-driving car plans,” The Guardian, January 18, 2017.)
Hence, whatever risks arise due to Donald Trump’s policies for the sector, it appears that Amazon will be able to find a solution to them and Amazon stock will rise on the back of the strengths of its businesses.
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