How Will Tech Stocks Perform as We Head into the November Election

How Will Tech Stocks Perform as We Head into the November Election

Posted On October 5, 2020 7:16 pm

Last week, President Donald Trump and former vice president Joe Biden faced off in their first of a series of debates that lead to the November 3 election. On Friday, the markets received the first of what could be many October surprises as President Trump and First Lady Melania Trump tested positive for COVID-19.

While the Presidential election is in the spotlight, voters will also decide the majorities in the House of Representatives and the Senate. A clean sweep by either political party could lead to substantial changes in taxes, energy, regulations, and many other government policies over the coming years.

Gridlock would likely continue a circus of political wrangling, as we witnessed over the past years. Political discord between Democrats and Republicans has resulted in a situation where the two sides cannot agree on anything. Even issues with bipartisan support have stalled because either side does not want to give the other any victory when it comes to legislation.

Technology has changed the world. The global pandemic only accelerated the growth in the technology sector. It allows people to work at home and communicate when social distancing and shelter in place guidelines precluded direct human interaction. Many changes in the workplace and social interaction will remain after the coronavirus fades into history.

Shares of technology companies soared, taking the NASDAQ to record highs. The market caps of the leading companies in the sector have swelled to levels that created a trillion-dollar club. Apple’s (AAPL) rose to over $2 trillion before the latest correction.

After the dust of the election settles, and a clear winner emerges, the US government will likely address dominance by the leading technology companies. Massive amounts of capital and access to data make for a powerful combination that creates dominance when it comes to growing businesses and competing with others.

Moreover, the companies’ leaders and founders have seen their wealth grow to levels where they have become American oligarchs. Jeff Bezos, the founder of Amazon (AMZN), has a net worth of around $175 billion. Expect the US government to begin to address the explosive growth in technology and the increase in wealth over the coming months and years.

The leading technology companies have dominant positions

The top tech businesses have a powerful position in the US and worldwide because of two factors. With massive capital levels, they can acquire competitors and emerging companies with new and improved technology and pursue strategies that maintain their leadership positions. Access to massive cash hordes enhances flexibility. Meanwhile, the data they produce may even be more significant as the technology companies know more about people’s behavior than the government and even individuals.

Anyone who doubts the power of data should do a simple search for a product. They will find that a tidal wave of pointed advertising follows any search. Technology has created powerful tools that track and predict all behaviors and pose a threat to privacy. Online searches and activities create records that are often worth their weight in gold. Data equals power. As technology evolves, data capture becomes more efficient and valuable.

Facebook, Amazon, Apple, Alphabet, and Microsoft are under a political microscope

Facebook (FB) had a market cap of…

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