One of the most hard-fought and contentious elections in U.S. history is now in the books, and Donald J. Trump has emerged as the President-elect. Many things are expected to change, and investors are turning over every stone to find the stocks that are best positioned to profit in the next four years.
Astute investors will note that one of the biggest catalysts over the past couple of years has been the rapid adoption of artificial intelligence (AI) and the implications of that technology to usher in the fourth industrial revolution. Generative AI, while still experiencing growing pains, has the potential to automate many mundane tasks, which would ultimately increase productivity and boost profits.
While the adoption of the technology is still in the early stages, many experts are predicting trillions of dollars will be added to the global economy, resulting in a windfall for leaders in the field.
Let's look at supercharged growth stocks that could profit from a Trump presidency, according to certain Wall Street analysts.
Image source: Getty Images.
1. Microsoft
Microsoft (MSFT +0.52%) has been among the early beneficiaries of AI. The company was quick to recognize the game-changing potential of the technology, investing heavily in ChatGPT parent OpenAI. The fruit of that strategy was the development of Copilot, a suite of digital assistants powered by generative AI. Microsoft has demonstrated and deployed these Copilots, which have been adopted by "customers in every industry," according to CEO Satya Nadella.
One example provided by management was the rollout of Microsoft 365 Copilot to 68,000 employees at one company, saving three hours of time per person, per week, on average.
Success stories like these are also helping fuel the adoption of Azure, Microsoft's cloud infrastructure service, which grew 33% year over year. It said Azure's growth included 12 percentage points resulting from demand for AI services. The company also offers a laundry list of the world's most popular AI models to its cloud customers.
Microsoft stock is up 74% since the start of last year (as of this writing), which coincides with the dawn of AI. However, analysts at UBS believe that the rapid adoption of AI is ongoing and will be fueled by Trump's presidency -- and Microsoft will continue to profit from the trend. The analysts cited the company's cloud revenue growth and the robust adoption of Copilot as drivers.
I have no doubt that the combination of cloud leverage and Copilot will form the foundation of Microsoft's robust AI efforts and generate tens of billions in incremental revenue and that trend will continue under the incoming administration.
NASDAQ: MSFT
Key Data Points
2. Palantir
Palantir Technologies (PLTR +3.68%) has been at the forefront of AI for more than 20 years, but it's the company's foray into generative AI that has investors most excited. The company used its decades of experience in the field to quickly develop its Artificial Intelligence Platform (AIP), which helps businesses develop AI-powered solutions to solve everyday problems. That has helped propel stock price gains of 765% since the start of last year.
Perhaps just as important, the company offered a novel way to help enterprises get the most out of AI, offering "boot camp" sessions that paired customers with Palantir engineers to optimize their AI solutions. Management highlighted numerous seven-figure deals that were signed within weeks after boot camp attendance. During the third quarter, it signed 104 deals worth at least $1 million, with 36 worth $5 million and 16 worth $10 million.
There's no arguing with the results. In the third quarter, Palantir says, its U.S. commercial revenue jumped 54% year over year, while its customer count for the segment jumped 77%, and its remaining-deal value surged 73%.
Wedbush analyst Dan Ives also believes that the adoption of AI will continue to gain steam, specifically calling out Palantir as one of the major beneficiaries. In a note to clients, Ives wrote (emphasis mine), "Under a Trump Administration, we would expect major AI initiatives within the U.S. government, including the Department of Defense, that would also be a major tailwind from AI players like Palantir."
I've long been intrigued by Palantir's approach to AI and have been adding shares this year.
NASDAQ: TSLA
Key Data Points
3. Tesla
While Tesla (TSLA +0.32%) is widely regarded as an electric vehicle stock (it is), it's also one of the foremost authorities on AI. The popularity of its market-leading EVs has driven impressive stock price gains since the dawn of 2023.
The company has amassed an unrivaled cache of data thanks to the millions of its vehicles on the road collecting information, which it plans to use one day to fuel its fleet of self-driving Robotaxis. Cathie Wood's ARK Invest estimates that the company currently has a significant data advantage amounting to 1.3 billion cumulative full self-driving miles.
CEO Elon Musk was a fixture in Trump's campaign, appearing at events and donating heavily to his reelection bid, which the President-elect acknowledged in his acceptance speech. Trump called Musk a "super genius" and promised him a position in his administration.
Some believe that the incoming administration will look more favorably on Musk's autonomous-driving and Robotaxi ambitions, which would work to Tesla's benefit. Indeed, the stock rose nearly 15% Wednesday in the wake of Trump's victory.
On the heels of the election, Wedbush analyst Dan Ives said, "The biggest positive from a Trump win will be for Tesla." Ives suggested a Trump presidency will be an "overall negative for the EV industry," as it will likely mark the end of rebates and tax incentives for future customers.
That said, Tesla has established itself as the leader, with the "scale and scope that is unmatched in the EV industry ... [giving] Tesla a clear competitive advantage," Ives added. And Trump has promised higher tariffs on imports, which would make rival Chinese EVs less competitive.
It stands to reason that a more positive regulatory and policy environment would be a boon for Tesla -- and its investors.
