Will Trump 2.0 policies benefit tech, or only Elon Musk and friends?

Tesla Motors' stock has spiked by nearly a third since Trump's election win on November 5

While analysts are predicting significant and far-reaching impacts from Donald Trump's second presidential term, the technology sector is already experiencing the potential effects of the next four years. Mr Trump has made many promises on the campaign trail, including higher tariffs to favour American industry, mass deportation of migrants and the replacement of Obamacare, among others.

However, when it comes to technology, while the recent performance of tech stocks appears promising, there is still a significant amount of uncertainty and cautiousness about the broader sector's prospects. Mr Trump's tech sector backers will be pushing for him to roll back regulations that they view as unfriendly to companies in areas like artificial intelligence and cryptocurrencies, said Kevin Allison, president of Minerva Technology Policy Advisors, a Washington-based consultancy specialising in technology and geopolitics.

"At the same time, Mr Trump is promising tariffs, which raise costs for businesses and consumers and could disrupt tech supply chains. Mr Trump is also likely to continue or expand on [outgoing President Joe] Biden’s tough-on-China tech policies with support from security hawks in Congress," he tells The National. That, he adds, could drive a further geopolitical split of the tech stack and put other countries under more pressure to choose sides.

Many tech leaders – Tesla and X boss Elon Musk being the most notable – have proactively engaged with Mr Trump, aiming to build influential connections that could help them navigate upcoming policy shifts. Mr Musk's favourite memecoin, Dogecoin, has already doubled in value and has created more crypto millionaires since Mr Trump's victory.

That also led to the creation of a new US government entity, the Department of Government Efficiency, which is to be led by Mr Musk and businessman Vivek Ramaswamy, who once challenged Mr Trump for the Republican nomination. The entity's mission will be to “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures and restructure federal agencies”.

That is building up to cautious optimism among tech players, "mixed with strategic engagement and regulatory concerns", says Hani Abuagla, a senior market analyst at broker XTB Mena. "Support from prominent industry figures like Mr Musk suggests a more collaborative approach, potentially aligning administration priorities with tech interests. This may mean less regulatory oversight on innovation, particularly in AI and mergers, which would benefit large tech firms," he says.

On friends and foes

A new Trump administration means another potentially polarising situation. In his first administration, those who ran counter to his policies, most notably China, were unable to do business with the US, which affected profits.

However, closer to home, allies have so far been benefitting. Tech share prices, in particular, have risen considerably: as of Tuesday's close, Tesla Motors' stock has spiked nearly a third since the close on November 5, towing its market cap back to the trillion-dollar level. Google parent Alphabet has risen 7 per cent, Nvidia 6 per cent, Amazon 4.7 per cent and Microsoft 2.8 per cent.

That also resulted in the wealth of the 10 richest people in the world to leap by a record $64 billion, the Bloomberg Billionaires Index showed last Wednesday. Gains in technology wealth led the way: Wednesday's wealth growth was a nearly 39 per cent rise for those in that sector and, as of Tuesday, that has further grown to 43.5 per cent.

Mr Musk was the biggest beneficiary as his wealth has jumped by 51 per cent to $319 billion as of Wednesday. The wealth of Amazon founder Jeff Bezos and Oracle founder Larry Ellison – also Trump supporters – are up 38.4 per cent and 59.5 per cent at $230 billion and $203 billion, respectively.

"From Brussels to Beijing and Moscow to Silicon Valley, this is not 2016. Mr Trump is no longer an unknown quantity on policy. In addition to his record in office, he and his team have spent the last four years constructing a policy infrastructure," Mohammed Soliman, a director at the Washington-based Middle East Institute think tank, tells The National.

Mr Trump rose to fame as a businessman and billionaire, and though his actual wealth has never been publicly known, Forbes has estimated that, as of November, his net worth is about $5.8 billion. In retrospect, his "I mean business" pitch when he first ran for the White House in 2016 proved to be one of his most popular selling points for the presidency – and seems to have carried him again this year.

That business-friendly pitch "is what he has proven during his first term. The positive consensus [at present] can be seen in tech stocks," Mehow Pospieszalski, chief executive of Wyoming-based FinTech company MatterFi, tells The National. "The pro-Trump mood is even more obvious in the market for cryptocurrencies, where Bitcoin smashed the glass ceiling."

It is worth noting, however, that Mr Trump made a spectacular U-turn when it comes to cryptocurrency: in his first term, he derided Bitcoin and its peers as a "not money", "based on thin air" and something that "can facilitate unlawful behaviour, including drug trade and other illegal activity [sic]", even calling it a "scam" after he left office.

The turning point was when Mr Trump began selling non-fungible tokens of himself as a superhero in December 2022, a month after he declared his intention to run for president again. He raised $8.9 million in the process, which apparently proved to him that crypto can be beneficial. It may have also helped that the vice president-elect, JD Vance, has been known to own Bitcoin since 2021.

Bitcoin, the world's first and biggest cryptocurrency, has surged since Mr Trump's win and is knocking at the unprecedented $90,000 level, having hit about $89,840 earlier on Tuesday, data from CoinMarketCap shows. It has since pulled back to about $87,410 on Wednesday. Mr Trump has promised to take a friendlier approach to digital assets, which has likely won him supporters. The sector would be now "welcomed, with venture capital, deals and tech innovation to grow", Mr Pospieszalski adds.

"Friends and foes will be bracing for a return to Mr Trump’s more transactional style of diplomacy, including on tech and trade. For Europe, Mr Trump’s win is likely to revive concerns about digital sovereignty, particularly if he returns to the confrontational diplomacy that we saw during his first term," Mr Allison says.

AI (de)regulation

For AI, which has exploded over the past couple of years, a second Trump term would continue what he started: the former president issued the country’s first AI executive order in 2019 to kick-start the American AI Initiative. The incoming president is expected to "remove barriers to innovation and promoting AI research and development" to make the US the global AI leader, Joseph Wehbe, chief AI ecosystem builder at the New Jersey-based Daimlas and a contributor to the World Economic Forum, tells The National.

"AI is not policy or regulation-driven, it is intellectually driven. The latest advancements in AI are research-driven. As long as the academia/innovation ecosystem is strengthened and receives funding for research and attracting the best talent in academia and entrepreneurs, America will continue to lead globally with AI," he says.

Mr Trump is expected to take a predominantly hands-off approach to AI regulation, favouring industry self-regulation and minimal government interference to promote innovation and US competitiveness. That may mean his administration is likely to withdraw Mr Biden’s AI executive order and replace it with policies that support AI development, aligning with his deregulatory stance. However, it also remains unclear if he will allow countries like the UAE and Saudi Arabia to gain more access to American technologies, assuming he wants allies to further pivot away from China.

However, national security concerns are likely to prompt a more targeted approach in specific areas, particularly in defence and military applications, Mr Soliman says, noting that on this front, Mr Trump may prioritise rapid AI advancements, increasing support and funding for defence-focused AI projects and potentially forming partnerships with private companies to accelerate progress.

"While he has noted potential risks associated with powerful AI systems, any regulatory measures are expected to be selective, emphasising voluntary commitments over binding regulations. Competition with China will likely drive this strategy, focusing on US technological leadership with minimal restrictions outside national security and defence applications," he adds.

For now, the new Trump administration will remain unpredictable, as he was in his first stint as president. However, he did stick to a number of his promises, including prioritising American companies and lowering taxes. This gives the technology sector and the markets room to gauge the situation and plan out their strategies moving forward.

"The unpredictable nature of Mr Trump is always in the way he talks. His policies were pretty clear and unwavering, with a significant warm-up time for the market to adjust," Mr Pospieszalski says.