For the last couple of weeks, the capital markets featured some pretty outsize volatility as the outcome of the presidential race between Vice President Kamala Harris and former President Donald Trump looked like a toss-up. But now that the outcome is clear, investors surely are thinking about the changes an incoming Trump administration could bring.
During a recent interview with Yahoo! Finance, Wedbush Securities analyst Dan Ives explained why he’s bullish on the technology sector right now. Furthermore, Ives went on to proclaim that Tesla (NASDAQ: TSLA) is positioned to kick into a whole new gear as Trump nears the Oval Office.
Let’s break down why tech stocks and in particular Tesla should be on your radar under the new Trump administration.
How a Trump administration could bode well for technology businesses
One of the prominent themes throughout Trump’s campaign was his consistent suggestions of imposing tariffs on certain imported goods. While this vision is likely in early stages, I think there’s a good chance that any tariffs put in place could be emphasized on overseas technology businesses in particular.
Similar to the Biden-Harris administration’s focus to bolster U.S. semiconductor manufacturing and technology research, I think the incoming Trump team will likely continue focusing on domestically sourced technology and U.S.-based businesses.
Image source: Getty Images.
Why Dan Ives thinks Tesla is in a uniquely lucrative position
During the final stages of the election cycle, Tesla CEO Elon Musk emerged as a heavily influential force for the Trump campaign. But even prior to his involvement with Trump’s rallies and vocal support for 47, Musk had been teasing the idea of creating a new government agency focused on efficiency through significant reductions to the federal budget.
In the clip below, Ives shares his thoughts on why Tesla could be a major winner from the Trump White House.
“Autonomous is going to get fast-tracked in our opinion, and that is significant,” Wedbush managing director @DivesTech says on $TSLA. “That’s worth $1 trillion alone in terms of the AI piece to Tesla, and that’s why for Musk, the bet on Trump, it’s a poker move for the ages.” pic.twitter.com/U3rMjisDSE
— Yahoo Finance (@YahooFinance) November 8, 2024
As Ives cleverly puts it, there’s a good chance Musk ends up as a “whisperer in the White House.” As it pertains to Tesla, this could mean more fast-tracked regulatory approval for the company’s autonomous vehicle ambitions.
Musk’s influence in the White House could swiftly propel Tesla into a new growth period of epic proportions. In addition to Ives, longtime Tesla bull Cathie Wood of Ark Invest sees autonomous driving fleets as a trillion-dollar opportunity.
Is Tesla stock a buy right now?
On Oct. 5, Musk made a public appearance alongside then-candidate Trump at a rally in Pennsylvania. Almost exactly one month later, shares of Tesla have gained 28% as of market close on Nov. 8.
Moreover, since Election Day (Nov. 5), Tesla stock is up 33%, at the time of this writing. This price action suggests that investors are beginning to price in Musk’s involvement with the Trump campaign and it’s now lending itself to ideas of how the entrepreneur and his companies could benefit from the incoming administration.
While I agree with the ideas Ives presented, I would encourage investors to zoom out and think about the big picture right now. Clearly there’s more than a little momentum fueling Tesla stock as investor euphoria skyrockets. As such, Tesla has experienced meaningful valuation expansion in an absurdly short time frame.
Candidly, I see this level of volatility in Tesla stock as a day trading play. I can say with a high degree of confidence that a sell-off will occur sooner rather than later, and those who follow day traders into momentum swings will be left holding the bag.
So while I don’t think buying Tesla stock at this exact moment is a sound decision, I am optimistic about the company’s prospects over the next four years as Trump enters the White House. I agree with Ives that Musk’s relationship with Trump will bear fruit in some fashion, and I’d encourage investors to keep an eye out on any developments surrounding Tesla’s autonomous driving initiatives as progress made on this front will likely supercharge the stock price.
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Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.