MW Buy the tech stock dip ahead of Trump rally, popular analyst says

By Louis Goss

U.S. stocks fell sharply on Wednesday in response to Federal Reserve chairman Jerome Powell's suggestion that the central bank will take a more cautious approach to cutting interest rates in 2025, but in the view of analysts from Wedbush Securities, the sell-off has simply created another opportunity for investors to buy the dip.

In a note, Wedbush's analysts suggested investors now pile into technology stocks to capitalize on a continuation of the past year's rally which may be accelerated by new Donald Trump-led initiatives aimed at boosting America's artificial intelligence (AI) sector.

"This sell-off is just another buying opportunity to own tech winners poised to play in a robust AI Revolution into 2025," Wedbush analysts, led by Daniel Ives, said in a note.

Wedbush's analysts said they expect the stocks of the 'Magnificent Seven' technology giants will continue to surge in 2025 on the back of an "AI arms race" fueled by increased support from the U.S. government under Trump.

"We will see more of these bumpy days (Fed, Trump tariff fears, etc.) as the bears come out of hibernation after missing a historic tech rally....but ultimately it does not move the needle for a soft landing and bullish backdrop for risk-on assets," Wedbush's analysts said.

Top technology companies including Microsoft $(MSFT)$, Amazon.com $(AMZN)$, and Google $(GOOGL)$ $(GOOG)$ will likely receive a boost in 2025 from Trump administration policies aimed at boosting America's AI industry, the analysts said.

Oracle $(ORCL)$ and Palantir $(PLTR)$ could also be lifted by any AI-focused initiatives introduced by the Trump administration via the U.S. Department of Defence.

Technology stocks could be further boosted by an uptick in mergers and acquisitions on the back of Trump's shakeup of the Federal Trade Commission $(FTC.UK)$ that is expected to see Andrew Fergusan replace Lina Khan as chair of the antitrust agency.

Khan is viewed as having taken an assertive approach as the FTC's chair that has seen America's competition regulator take action to block high-profile acquisitions including Microsoft's $68.7 billion takeover of Activision Blizzard.

Webush's analysts said they expect Andrew Ferguson will "roll back Khan's head scratching anti-tech agenda including ending efforts to regulate AI and abandoning a brutal standard for any merger of any size for the tech world."

The switch up at the FTC will likely give a boost to top players including the 'Magnificent Seven' MAGS mega-cap companies in a shift that will see the "strong... get stronger," Wedbush's analysts said.

Tesla $(TSLA)$ is also likely to be a major beneficiary of the Trump administration's policies, particularly if the new administration works to fast track approval of the electric vehicle (EV) maker's autonomous driving technology, the analysts said.

-Louis Goss

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December 19, 2024 05:49 ET (10:49 GMT)

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