A year and three weeks after tech billionaires gathered at Donald Trump’s inauguration, the performance of their companies’ stocks has been mixed. While the event was intended as a show of tech’s alignment with the new administration, it may have inadvertently signalled a shift in market dynamics. Despite a recent tech recovery, Meta Platforms’ stock is down 4 per cent and Amazon’s share price has fallen just over 11 per cent. Tesla’s share price has remained relatively flat while Google parent Alphabet has surged by more than 50 per cent. Meta Platforms is a multinational technology conglomerate focusing on social media and virtual reality. Amazon is a global technology company that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence.
Bank of America’s ‘billionaire bro index,’ comprising Nvidia, Palantir, Oracle, and other tech-related entities, has risen just 6 per cent since Trump’s inauguration, lagging behind the Russell 2000’s 13 per cent gain. This raises the question of why Main Street is outperforming tech. According to Bank of America strategist Michael Hartnett, the shift is due to Trump’s policies, which have spurred growth outside the US and targeted affordability issues, making large tech companies potential targets. This encourages investors to take profits in tech and rotate into other sectors.
Billionaire hedge fund manager Dan Loeb highlights a shift away from capital-light tech models towards capital-intensive businesses. Loeb notes that the long-perceived attractiveness of capital-light business models like software is being re-thought. Companies like Meta Platforms, Amazon, Alphabet and Microsoft are spending vast sums on AI infrastructure, impacting their balance sheets and stock buybacks. This scepticism around returns on investment in tech has further fuelled the rotation away from tech stocks. Loeb believes that while capital-lite stocks are being sold, capital-heavy stocks can do well.
Capital-intensive businesses, such as construction services and transport, are gaining favour as investors recognise their critical role in rebuilding supply chains and national security. This trend is also apparent in Australia, where resource stocks are performing strongly and M&A activity focuses on acquiring hard assets. These shifts suggest a broader realignment in investment strategies, favouring companies with tangible assets and exposure to infrastructure development.
