Last week, the stock market rallied as the 2020 election results rolled in. The Nasdaq Composite Index surged 8.6%. Donald Trump and Joe Biden were in close competition on electoral votes. Over the weekend, Joe Biden dethroned Donald Trump in the race for the next U.S. President. However, Bidens win doesnt guarantee him a blank check to implement his policies as it appears Republicans will remain in control of the Senate.
Before the election, State Street Global Advisors Chief Investment Strategist Michael Arone stated that the stock market would rally irrespective of the election results on the back of low-interest rates and fiscal and monetary policy. While he is right so far, three tech stocks Alphabet Inc. (GOOGL), Facebook (FB), and Alibaba Group Holding Ltd (BABA) will benefit from a split Congress. These stocks soared 9%, 11.5%, and 5%, respectively, on the expectation of congressional gridlock.
How will a split Congress benefit tech stocks?
In October, GOOGL and FB came under fire when the Justice Department launched an antitrust lawsuit. The big four tech giants, including Apple (AAPL) and Amazon (AMZN), have digital monopolies in their respective fields. GOOGL controls the search and advertising space, and FB controls the social networking space.
The subcommittee report made several suggestions to address the anti-competitive practices of the four tech giants. Some of these suggestions were:
These suggestions, if implemented, could take a long time and significantly deleverage the tech giants power of data and efficiency. While US tech giants faced an antitrust threat, BABA was negatively impacted by the US-China trade war.
The three companies came under the scrutiny of Democrats and Republicans ahead of the election. But the divided control of the Senate could make it difficult to pass US antitrust laws that are targeted towards internet giants. According to a Bloomberg report, Synovus Trust Company Senior Portfolio Manager Dan Morgan, in an email, wrote, A Democrat-controlled Senate would be more likely to create overhaul and fine on Tech giants. Whereby, a Republican-controlled Senate (which seems to be most likely) would have a more laissez-faire stance.
Morgan also stated, A massive capital gains increase is not going to get through a Republican-controlled Senate. This will bring significant tax savings for tech investors who have generated huge profits on the tech stock rally over the last few years. Moreover, gridlock could ease global trade tensions, especially with China.
Internet stocks and Chinese stocks could rally significantly this week on the back of a favorable election outcome.
Alphabet Inc. (GOOGL)
GOOGL rules the online search and advertising space. Before the elections, both Democrats and Republicans argued that GOOGL has way too much control over the way people shop, search, and consume information. The Justice Department filed a monopoly-abuse suit against GOOGL last month to stop its anticompetitive and exclusionary practices.
The department noted that GOOGL favors its products by giving them higher ranking over third-party content. It also wades out the competition by acquiring potential competitors like Android. The department suggested banning product favoring and the acquisition of tech startups to create an even playing field. It also suggested breaking up GOOGL. If GOOGL was to be broken up, its Android OS and Search were more likely to be split.
GOOGL has built its search monopoly by collecting a large amount of data from users and feeding it into its algorithm to create more behavioral data. The Justice Department suggested interoperability, wherein GOOGL would be required to interconnect with other networks to ensure the same services are available across firms.
GOOGL collected this data by offering free products to consumers. It earns 84% of its revenue from advertising. Any of the above suggestions would reduce its advertising revenue and hurt consumers who are getting free or low-cost products.
These antitrust threats had little impact on the stock, with GOOGL gaining 8.6% last month. However, the election results reduced the antitrust threat, relieving investors and pushing the stock up 8.9% in the first week of November. The search engine giant should continue to grow in this age of digitization.
How does GOOGL stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Industry Rank
A for Peer Grade
A for overall POWR Rating
You cant ask for better. The stock is also ranked #2 stock in the 58-stock Internet industry.
Facebook (FB)
Like GOOGL, FB also uses its monopoly in social networking, messaging, and user data to dictate the terms of advertising. It favors its products and content over third-party content. Also, it acquired its potential competitors WhatsApp and Instagram. It even acquired many startups so no new company could come close to challenging its dominance.
The Justice Department suggested interoperability as well as data portability, wherein users can migrate their FB data to other platforms. Here again, FB collected this data over the years by offering free services. It is now monetizing this data through advertising and e-commerce.
FBs entire revenue comes from advertising. The above suggestions could hurt its revenue. Hence, its stock went through a rollercoaster ride in October, but the overall impact was positive. The stock surged 5.3% last month and 4.4% in the first week of November. With the ease in regulatory concerns, FB can focus on its e-commerce venture to boost future growth.
FB is rated Buy in our POWR Ratings system. It also has an A for Trade Grade, Peer Grade, and Industry Rank, and a B for Buy & Hold Grade. In the Internet industry, it is ranked #5.
Alibaba Group Holding Ltd (BABA)
BABA dominates the Chinese e-commerce market. It also leads in the cloud computing space and is now expanding into internet content services. But all this dominance is in the Chinese market. For a giant like BABA, it needs to expand beyond China to sustain growth.
In September 2014, BABA launched the worlds largest IPO of $25 billion on the New York Stock Exchange (NYSE), with a stock price of $68. Since then, it has grown fourfold to $272 on the back of growth in e-commerce and other sectors. While BABAs earnings were unaffected by the US-China trade war, it was investors fear that prevented the stock from rallying above $200 on the NYSE in 2018-2019.
However, the pandemic-infused e-commerce wave drove BABAs stock up 41% year-to-date to $299. BABAs stock dipped 8% last week even though it reported robust earnings. The stock dipped as Chinese officials and regulators suspended the $37 billion IPO of fintech company Ant Group, after Jack Ma gave a speech critical of the Chinese banking industry at a summit.
Amidst this heat, the US election outcome came as pleasant news. A gridlock Senate would ease the U.S. tariffs on China and revive US investors confidence in the Chinese giant. BABA should continue to ride the digitization wave and report strong growth in the future.
Hence, BABA is rated a Strong Buy in the POWR Ratings. It holds straight As in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. It is also ranked #1 in the 115-stocks China industry.
Note that BABA is one of 8 stocks in the Reitmeisters Total Return portfolio. Learn more here.
Want More Great Investing Ideas?
9MUST OWNGrowth Stocks for 2021
5 WINNING Stocks Chart Patterns
7 Best ETFs for theNEXTBull Market
GOOGL shares were trading at $1,806.26 per share on Monday morning, up $46.53 (+2.64%). Year-to-date, GOOGL has gained 34.86%, versus a 14.06% rise in the benchmark S&P 500 index during the same period.
Puja is a seasoned writer working with financial publishing companies like Motley Fool Canada and Market Realist. With over 13 years of experience in the field of fundamental research, she brings a blend of comprehensive, well-researched insights into her articles. More...
View original post here:
GOOGL: 3 Best Technology Stocks to Buy After the Election - StockNews.com
- S. Korea to launch $825mn fund to compete with Netflix, YouTube - Business Insider India - June 22nd, 2020 [June 22nd, 2020]
- Boomerangs and Frisbees: The effect of COVID-19 on HR trends - Thomsons Online Benefits - June 22nd, 2020 [June 22nd, 2020]
- Five key questions about Google and Apple's contact tracing system - The Telegraph - June 22nd, 2020 [June 22nd, 2020]
- The Consequences Of Shifting To A Hybrid Work Model - ABCN's Officing Today - June 22nd, 2020 [June 22nd, 2020]
- Big Tech Zeros In on the Virus-Testing Market - The New York Times - June 22nd, 2020 [June 22nd, 2020]
- From now on, we will divide history into before and after this pandemic - The Guardian - June 22nd, 2020 [June 22nd, 2020]
- Patagonia becomes latest company to pull ads from Facebook | TheHill - The Hill - June 22nd, 2020 [June 22nd, 2020]
- Andrew Yang wants people to get paid for data collected by tech giants - The Daily Dot - June 22nd, 2020 [June 22nd, 2020]
- DoF faces uphill battle in taxing tech giants The Manila Times - The Manila Times - June 22nd, 2020 [June 22nd, 2020]
- Juneteenth across the tech world - POLITICO - Politico - June 22nd, 2020 [June 22nd, 2020]
- TikTok joins the EUs Code of Practice on disinformation - TechCrunch - June 22nd, 2020 [June 22nd, 2020]
- For Health Tech Startups, Data Is Their Lifeline Now More Than Ever - Crunchbase News - June 22nd, 2020 [June 22nd, 2020]
- Apples iOS 14 will give users the option to decline app ad tracking - TechCrunch - June 22nd, 2020 [June 22nd, 2020]
- You want diversity, inclusion in tech? Embrace remote work - ZDNet - June 22nd, 2020 [June 22nd, 2020]
- Trump kept these tech giants apart now ones a buy and the other should be avoided - MarketWatch - June 22nd, 2020 [June 22nd, 2020]
- US pulls out of talks to tax tech giants in a blow to Europe's plans - CNBC - June 22nd, 2020 [June 22nd, 2020]
- European Union Seeks to Restrict Tech Giants From Grinding Smaller Competitors WIth Updated Tax and Content Ru - Tech Times - July 11th, 2020 [July 11th, 2020]
- Sequoia Capital Opens Its First Tech Incubation Center in Shanghai - Caixin Global - July 12th, 2020 [July 12th, 2020]
- Indian Govt Wants Tech Giants Google, Amazon And Facebook To Provide Source Code And Algorithms - IndianWeb2.com - July 12th, 2020 [July 12th, 2020]
- Invest NI's Bill Montgomery who helped bring top US tech giants to Northern Ireland steps down - Belfast Telegraph - July 12th, 2020 [July 12th, 2020]
- The Future of Remote Work, According to Startups - Visual Capitalist - July 12th, 2020 [July 12th, 2020]
- 10 big things: TikTok, on the clock - PitchBook News & Analysis - July 12th, 2020 [July 12th, 2020]
- Tiktok and finding the real digital imperialists - The New Indian Express - July 12th, 2020 [July 12th, 2020]
- US slaps French goods with 25% added duties, but delays effective date - Financial World - July 12th, 2020 [July 12th, 2020]
- U.S. targets $1.3-billion in French imports in retaliation for tax on tech giants - The Globe and Mail - July 12th, 2020 [July 12th, 2020]
- Kudos to TikTok, tech brethren; Starbucks & Luckin have us soured on coffee cos. - Compliance Week - July 12th, 2020 [July 12th, 2020]
- Silicon Valley giants have thousands of US military contracts - E&T Magazine - July 12th, 2020 [July 12th, 2020]
- Tech giants: From the basement to world domination - KnowTechie - July 12th, 2020 [July 12th, 2020]
- This Week's Awesome Tech Stories From Around the Web (Through July 11) - Singularity Hub - July 12th, 2020 [July 12th, 2020]
- US tech giants halt Hong Kong police help TechCrunch - July 12th, 2020 [July 12th, 2020]
- Infographic: How the Tech Giants Make Their Billions - July 12th, 2020 [July 12th, 2020]
- facebook: US tech giants face hard choices under Hong Kong ... - July 12th, 2020 [July 12th, 2020]
- FYI: You do all know that America's tech giants, even ... - July 12th, 2020 [July 12th, 2020]
- TikTok ban: Facebook, tech companies benefit from US ... - July 12th, 2020 [July 12th, 2020]
- U.S. Tech Giants Pause Responses To Hong Kong Requests ... - July 12th, 2020 [July 12th, 2020]
- IBM Q2 earnings preview: can the tech giants cloud revenue keep growing? - IG Bank - July 16th, 2020 [July 16th, 2020]
- Buying tech stocks is the most crowded trade in history. - The New York Times - July 16th, 2020 [July 16th, 2020]
- Dow Jones Slumps as Johnson & Johnson Boosts Outlook, Apple and Cisco Stocks Head Lower - Motley Fool - July 16th, 2020 [July 16th, 2020]
- IBM, Verizon team up for 5G effort aiming to accelerate business solutions - WRAL Tech Wire - July 16th, 2020 [July 16th, 2020]
- BREAKING: American Tech Giants Google-Apple Remove Palestine From World Maps, Replace With Israel - India.com - July 16th, 2020 [July 16th, 2020]
- VMware Invests With Other Tech Giants In Digital Assets Series C Round - Forbes - July 16th, 2020 [July 16th, 2020]
- U.S. tariff threat isn't swaying France on taxing tech giants - Accounting Today - July 16th, 2020 [July 16th, 2020]
- Trio of Tech Giants the Latest on Receiving End of BIPA Lawsuits - findBIOMETRICS - July 18th, 2020 [July 18th, 2020]
- G Suite's new unified interface poses an existential threat to Zoom and Slack - Business Insider - July 19th, 2020 [July 19th, 2020]
- India's Jio creates 5G tech in-house, teams with Google on affordable smartphone - FierceWireless - July 19th, 2020 [July 19th, 2020]
- The Twitter Hacks Have to Stop - The Atlantic - July 19th, 2020 [July 19th, 2020]
- Tech giants this country needs YOU! Do your moral duty and stop avoiding tax to help save our economy - The Sun - July 19th, 2020 [July 19th, 2020]
- Apple expands coding partnership with Black schools as tech firms grapple with lack of diversity - USA TODAY - July 19th, 2020 [July 19th, 2020]
- How Huawei landed at the center of global tech tussle - Chicago Daily Herald - July 19th, 2020 [July 19th, 2020]
- Kamala Harris blamed for EVERYTHING as Internet mocks news report 'exposing' her ties to tech giants - MEAWW - July 19th, 2020 [July 19th, 2020]
- Wall Street delivered the 'kind of pullback I've been waiting for,' Jim Cramer says - CNBC - July 19th, 2020 [July 19th, 2020]
- American tech giants Google-Apple remove Palestine from world maps, replace with Israel - Daily Times - July 19th, 2020 [July 19th, 2020]
- Chinese tech giants have tens of billions at stake in India - TechNode - July 19th, 2020 [July 19th, 2020]
- The Streaming Wars Could Become a Battle of Tech Giants. Heres Why. - Barron's - July 19th, 2020 [July 19th, 2020]
- Advertising giants agree to evaluate mutual definition of hate speech - Axios - July 21st, 2020 [July 21st, 2020]
- MPs say tech giants have 'failed to tackle' Covid-19 infodemic and Government must regulate them now - Press Gazette - July 21st, 2020 [July 21st, 2020]
- US Tech Giants trying to survive the Chinese Market - Market Capitalize - July 21st, 2020 [July 21st, 2020]
- China's aggression is undermining its tech giants' global ambitions - Nikkei Asian Review - July 21st, 2020 [July 21st, 2020]
- With Just $130K In Funding, Indias Nimo Planet Is Looking To Challenge Tech Giants With Its Smart Glasses - Inc42 Media - July 21st, 2020 [July 21st, 2020]
- Coronavirus scams (back) in the spotlight - POLITICO - Politico - July 21st, 2020 [July 21st, 2020]
- The background to EU citizens' court win over US tech giants - The Guardian - July 21st, 2020 [July 21st, 2020]
- Heres why BlackRocks bond chief says hes bullish on highflying tech stocks - MarketWatch - July 23rd, 2020 [July 23rd, 2020]
- How buyouts by big tech stifle innovation - Livemint - July 23rd, 2020 [July 23rd, 2020]
- Apple digs in over its App Store fees - BBC News - July 23rd, 2020 [July 23rd, 2020]
- How Spotify and TikTok Beat Their Copycats - Harvard Business Review - July 23rd, 2020 [July 23rd, 2020]
- What does the pandemic mean for the smart city revolution? - TechHQ - July 23rd, 2020 [July 23rd, 2020]
- Cramer says moves in tech stocks are 'truly insane' as Amazon and Tesla climb - CNBC - July 23rd, 2020 [July 23rd, 2020]
- Google has a plan to lure shoppers away from Amazon - CNET - July 23rd, 2020 [July 23rd, 2020]
- Could the pandemic affect our perspective on smart cities? - Tech Wire Asia - July 23rd, 2020 [July 23rd, 2020]
- 11 China-based Suppliers of US Tech Giants Sanctioned Over Alleged Human Rights Abuses vs the Uighur - Tech Times - July 23rd, 2020 [July 23rd, 2020]
- Apple, Google and Sony will be critical to MLB season shortened by coronavirus - CNBC - July 23rd, 2020 [July 23rd, 2020]
- Meet Gaia X Europe's answer to the power of U.S. and Chinese cloud giants - CNBC - July 23rd, 2020 [July 23rd, 2020]
- 5G takes the Senate stage - Politico - July 23rd, 2020 [July 23rd, 2020]
- Typewise taps $1M to build an offline next word prediction engine - TechCrunch - July 23rd, 2020 [July 23rd, 2020]
- Stocks fall to session low, with Dow the dropping 250 points as tech falters - CNBC - July 23rd, 2020 [July 23rd, 2020]
- These 5 tech giants could buy VMware if Dell chooses to sell the software giant, according to analysts: 'VMware would be a valuable property to any... - July 23rd, 2020 [July 23rd, 2020]
- US Congress to question heads of tech giants on Wednesday - Yahoo News - July 25th, 2020 [July 25th, 2020]
- China's newest technology stock exchange is thriving despite the pandemic - The Economist - July 26th, 2020 [July 26th, 2020]
- Tech CEO hearing will probably be postponed, sources say - CNBC - July 26th, 2020 [July 26th, 2020]
- Zuckerberg, Bezos, other tech CEOs to testify on competition - WBIR.com - July 26th, 2020 [July 26th, 2020]