Only once in U.S. history has a former president who lost reelection after his first term managed to become president again. The last time it happened was in 1892 when Grover Cleveland became the first — and, so far, only — president elected for two non-consecutive terms.
But Cleveland might soon have company. Former President Donald Trump is running neck-and-neck with Vice President Kamala Harris in the 2024 presidential race. If elected, his policies could impact the businesses of the so-called “Magnificent Seven” companies: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Meta Platforms (NASDAQ: META), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Tesla (NASDAQ: TSLA). What’s the best Magnificent Seven stock to buy if Trump wins in November?
Trump’s proposals that could impact the Magnificent Seven
Three major Trump proposals could impact the Magnificent Seven the most. The GOP presidential nominee’s proposed corporate tax cuts arguably belong at the top of the list.
During his first term, Trump signed legislation that overhauled the federal corporate tax rate structure. Previously, large corporations paid federal taxes of 15% to 35%. After the Trump tax cuts, these businesses paid a flat tax of 21%. The former president wants to slash this rate to 15% if he’s elected again.
Another key part of Trump’s economic policy for a potential second term is the implementation of across-the-board tariffs. He promises to impose tariffs of up to 20% on all imported products. Trump, who has referred to himself as “Tariff Man,” wants to impose tariffs of 60% on goods imported from China. He has also threatened to enact tariffs of 100% on products made in Mexico.
When Trump was president before, he was a fan of deregulation. Reducing federal regulations is likely to be a major focus again if he returns to the White House. Trump wants to eliminate 10 existing regulations for every new regulation. One promise that’s especially relevant to the Magnificent Seven is his pledge to repeal an executive order signed by President Biden that regulates artificial intelligence (AI).
How the Magnificent Seven could be affected
Paying less in federal taxes should be good for all the Magnificent Seven. However, the impact of Trump’s proposed corporate tax cuts perhaps won’t be as great as it might seem. As the following table shows, none of these giant companies pay the 21% federal tax rate in place now.
|
Company |
Effective Tax Rate in the Last Fiscal Year |
|---|---|
|
Alphabet |
13.9% |
|
Amazon |
9.7% |
|
Apple |
14.7% |
|
Meta Platforms |
17.6% |
|
Microsoft |
18.0% |
|
Nvidia |
12.0% |
|
Tesla |
(50% Tax Benefit) |
Data sources: Company 10-K filings. *Tesla received more tax benefits than it paid in taxes in 2023.
Steeper tariffs could especially impact the Magnificent Seven companies that rely on imported products and components. Although the companies would probably pass the increased costs along to consumers, the higher prices could negatively impact sales.
Apple would likely be the hardest hit by tariffs because of its global supply chain. All the others could also feel some effects of higher tariffs. The Magnificent Seven members that generate more revenue from services, particularly Alphabet and Meta, would probably be the least impacted by Trump’s proposed tariffs.
What about Trump’s deregulation focus? I think the major cloud service providers — Amazon, Microsoft, and Alphabet — could be helped by reduced AI regulations. So would Nvidia and, perhaps to a lesser extent, Meta and Tesla.
However, Trump has specifically criticized Alphabet, telling Fox Business host Maria Bartiromo in a recent interview, “Google has been very bad. They’ve been very irresponsible. And I have a feeling that Google’s going to be close to shut down, because I don’t think Congress is going to take it.” The former president has also called Meta’s Facebook “a true enemy of the people” in a social media post.
And while Tesla CEO Elon Musk supports Trump for president, Trump’s proposed policies could hurt Tesla. The GOP presidential nominee has railed against federal incentives for electric vehicles in the past. On the other hand, he told an audience at one of his rallies, “I’m for electric cars. I have to be because Elon endorsed me very strongly.”
The best Magnificent Seven stock to buy if Trump wins
So, what’s the best Magnificent Seven stock to buy if Trump wins in November? I think it’s a close contest between Microsoft and Nvidia.
Microsoft might be helped more by Trump’s proposed corporate tax cuts because it pays the highest effective tax rate of the Magnificent Seven companies. Both Microsoft and Nvidia could be hurt to some extent by the former president’s tariffs but helped by his regulatory stance. Neither has been singled out for attacks by Trump as Alphabet and Meta have nor have the industries in which they operate been the target of his ire like Tesla.
I believe Nvidia has stronger growth prospects than Microsoft, though. If I had to pick just one Magnificent Seven stock to buy if Trump returns to the White House, I would buy Nvidia.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
What’s the Best “Magnificent Seven” Stock to Buy if Trump Wins in November? was originally published by The Motley Fool
Source: finance.yahoo.com