Only once in US history has a former president who lost re-election after his first term been able to become president again. The last time this happened was in 1892 when Grover Cleveland became the first — and so far only — president to be elected to two non-consecutive terms.
But Cleveland may soon have company. Former President Donald Trump is competing with Vice President Kamala Harris in the 2024 presidential race. If elected, his policies could affect the actions of the so-called “The Magnificent Seven“Companies: alphabet (NASDAQ:GOG) (Nasdaq: Google), Amazon (Nasdaq: AMZN), apple (Nasdaq: Apple), Meta platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (Nasdaq: NVDA)and Tesla (NASDAQ: Tesla). What is the best Magnificent Seven stock to buy if Trump wins in November?
Trump’s proposals that could affect the Seven Wonders
Three key Trump proposals could affect the Seven Wonders the most. The corporate tax cuts proposed by the Republican presidential candidate arguably belong at the top of the list.
During his first term, Trump signed legislation to reform the federal corporate tax rate structure. Previously, large corporations paid federal taxes ranging from 15% to 35%. After Trump’s tax cuts, these companies paid a flat tax of 21%. The former president wants to reduce this rate to 15% if he is elected again.
Another key part of Trump’s economic policy for a potential second term is implementing comprehensive policies Definitions. He promised to impose customs duties of up to 20% on all imported products. Trump, who has referred to himself as the “Tariff Man,” wants to impose 60% tariffs on goods imported from China. He also threatened to impose 100% tariffs on products made in Mexico.
When Trump was president before, he was a fan of deregulation. Reducing federal regulations will likely be a major focus again if he returns to the White House. Trump wants to eliminate 10 existing regulations for every new one. One particularly relevant promise by the Magnificent Seven is his pledge to rescind the executive order signed by President Biden regulating artificial intelligence (AI).
How could the Great Seven be affected?
Paying less federal taxes should be a good thing for all the Great Seven. However, the impact of Trump’s proposed tax cuts on companies may not be as great as it seems. As the following table shows, none of these giant companies pay the 21% federal tax rate in effect now.
|
a company |
The effective tax rate in the most recent 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.
Stiff tariffs could particularly impact Magnificent Seven companies that rely on imported products and components. Although companies will likely pass on the increased costs to consumers, higher prices may negatively impact sales.
Apple is likely to be most affected by the tariffs because of its global supply chain. Others could also feel some of the effects of higher tariffs. Members of the Magnificent Seven that generate more revenue from services, especially Alphabet and Meta, are likely to be least affected by Trump’s proposed tariffs.
What about Trump’s focus on deregulation? I think the major cloud providers – Amazon, Microsoft, and Alphabet – can be helped by reducing AI regulations. So do 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 have been very irresponsible. And I have a feeling that Google is going to be on the verge of shutting down, because I don’t think Congress will accept that.” The former president also described Meta Facebook as the “true enemy of the people” in a social media post.
While Tesla CEO Elon Musk supports Trump for president, Trump’s proposed policies could hurt Tesla. The GOP presidential nominee has objected to federal incentives for electric vehicles in the past. On the other hand, he told the audience at one of his conferences: “I support electric cars. And I have to support it because Elon supported me very strongly.”
The best Magnificent Seven stocks to buy if Trump wins
So, what is the best Magnificent Seven stock to buy if Trump wins in November? I think it’s a close competition between Microsoft and Nvidia.
Microsoft may benefit more from Trump’s proposed corporate tax cuts because it pays the highest effective tax rate to Magnificent Seven companies. Both Microsoft and Nvidia could be hurt to some extent by the former president’s tariffs, but his regulatory stance helps them. Neither has been the target of Trump’s attacks like Alphabet and Meta, nor have the industries in which they operate been the target of his wrath like Tesla.
I think Nvidia has stronger growth prospects than Microsoft. 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, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights He holds positions at 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 $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
What is the best Magnificent Seven stock to buy if Trump wins in November? Originally published by The Motley Fool