How To Play The 'Trump Trade' For AI, Energy, Taxes: Analyst Says 5 Stocks Could Shine

Donald Trump will return to the White House and will bring major changes to the country's tax, AI and energy policies. RBC Capital Markets analyst Deane Dray highlighted some of the companies that may benefit from Trump's policies. 

Fossil Fuel/ Energy Independence: Trump's plans for energy independence would reverse many of the Biden administration's policies in order to reinvigorate the fossil fuel industry. He aims to expand the construction of pipelines, grids, ports and refineries and emphasizes utilizing domestic oil, gas and coal resources. Dray pointed to Flowserve Corp. FLS and Emerson Electric Co EMR as potential beneficiaries of Trump's energy policies. 

Read Next: What Does Trump’s Victory Mean For EV Giant Tesla And The Big 3 Automakers?

Rollback of IRA/ Reduced Clean Energy Investments: Trump has said he plans to eliminate many vehicle emissions standards under the Environmental Protection Agency as well as many EV incentives included in the Biden administration’s Inflation Reduction Act (IRA).

The RBC analyst again pointed to oil and gas companies as the key companies that could benefit from these potential policy adjustments, but cautioned it is too early to tell what the impacts might be for nuclear power companies. 

More Flexible/Reduced AI Regulation: RBC expects a Trump administration to be in favor of Big Tech and AI developers as he has called for a review of "unnecessary and burdensome regulations" on AI. The firm also pointed out that multi-industry data center-exposed stocks outperformed the sector by 500 basis points the day after Trump won the election. 

Dray said multi-industry companies involved in data centers that could benefit from Trump's less restrictive AI policies include nVent Electric Plc NVT and Eaton Corporation ETN. 

Lower Corporate Tax Rate: Trump shared his plans to lower the corporate tax rate to 15% for companies that make their products in the U.S. The RBC analyst sees lower corporate tax rates could lead to more reshoring from semiconductor and pharmaceutical companies and potentially more investment in the US.

Dray pointed to Roper Technologies, Inc. ROP specifically, but most publicly traded companies could benefit from lower tax rates. 

The Takeaway: "The bottom line is that early stock moves are playing out according to script, with the early stock outperformers being the electricals and oil and gas exposed names," Dray wrote. 

Read More: 

• Trump’s Big Tech Policies: What GOP Victory Means For Apple, Google, Microsoft

Photo: Shutterstock