What Trump election means for IT hardware, networking stocks: Evercore

When President-elect Donald Trump returns to the White House on Jan. 20, 2025, for his second term, it will affect IT hardware and networking firms in multiple ways.

While the potential for Trump tariffs could negatively affect some companies with large exposure to China, other proposed policies should provide benefits. These include lower corporate tax rates and fewer regulations, according to the analysts at Evercore ISI.

A reduction of the U.S. corporate tax rate to 15% from 21% would benefit companies that have a relatively high tax rate and a US-concentrated revenue mix. These include CDW (NASDAQ:CDW), Motorola Solutions (NYSE:MSI), Ciena (NYSE:CIEN) and Arista Networks (NYSE:ANET).

Regarding tariffs, companies generating a bulk of their sales revenue in foreign markets could be impacted. Companies who source many components or assemble a large percentage of their products in China face risks as well.

“Companies with products or components sourced in China could be disproportionately impacted,” said Evercore analysts, led by Amit Daryanani, in a note. “However, supply chain diversification efforts post pandemic can mitigate potential impacts.”

These companies include Apple (NASDAQ:AAPL), Dell (NYSE:DELL), Hewlett Packard Enterprise (NYSE:HPE) and HP (NYSE:HPQ). However, companies with a limited mix of product revenue related to China, such as Akamai (NASDAQ:AKAM) and IBM (NYSE:IBM), should be insulated.

Meanwhile, the likelihood of reduced regulations should benefit many names in this space.

“A more friendly M&A regulatory backdrop should be a positive for fairly active acquirers such as Amphenol (NYSE:APH), Cisco Systems (NASDAQ:CSCO), and IBM,” Daryanani noted. “IBM notably could be positioned for larger transactions given their balance sheet/FCF generation.”

Less big tech regulation would also benefit Apple.

Finally, a better economic environment for small to medium-sized businesses could provide upside to all companies in this space that provide services to SMBs.