In three days, a new era begins for America. When President-elect Donald Trump takes his inaugural oath of office on Jan. 20, it’ll mark only the second time in the history of our country that a president has served a nonconsecutive second term.
There is a laundry list of unknowns as the former president prepares to take office. For instance, there are concerns about trade relations between the U.S. and the world’s second-largest economy in the world, China. Trump has previously offered plans to implement a 35% tariff on goods imported from China on the first day of his second term. Tariffs run the risk of making things costlier for American consumers and businesses, as well as straining trade relations with China (and other countries).
President Donald Trump giving remarks. Image source: Official White House Photo by Shealah Craighead, courtesy of the National Archives.
The American public also worries about our nation’s rapidly climbing debt, which stands at north of $36 trillion. Trump favoring lower personal and corporate income tax rates may further worsen federal deficits and increase U.S. national debt.
President-elect Trump’s ascension to the Oval Office also means he and his administration will be reshaping the future of artificial intelligence (AI) in America.
Artificial intelligence is a $15.7 trillion addressable market
Incorporating AI into software and systems gives them the ability to become more proficient at assigned tasks, as well as offers the potential of learning new skills, all without the aid of human intervention. This capacity to learn, reason, act, and evolve over time gives this technology a sky-high ceiling.
Though estimates vary wildly, as you’d expect from a game-changing technology, the analysts at PwC believe AI will add 26%, or $15.7 trillion, to global gross domestic product in 2030. In Sizing the Prize, PwC expects $6.6 trillion to derive from increased productivity, with the remaining $9.1 trillion coming from consumption-side effects.
This otherworldly addressable market is precisely why we’ve witnessed AI stocks ascend to the heavens. Nvidia (NVDA -0.62%), which is the company behind the graphics processing units (GPUs) that act as the brains of high-compute data centers, gained around $3 trillion in market value in roughly two years. Meanwhile, AI-networking solutions provider Broadcom and world-leading chip fabricator Taiwan Semiconductor Manufacturing, which benefits from a backlog of GPU orders, both surpassed the trillion-dollar market cap plateau last year.
With the understanding that artificial intelligence has the potential to reshape multiple facets of our daily lives, President Joe Biden issued an Executive Order (EO) in late October 2023 laying out guidelines to minimize risks associated with AI, while also promoting this technology.
While far from a comprehensive list, Biden’s AI EO set rigorous testing standards on AI systems before their public release, laid out requirements for the government’s use and purchase of AI, listed actions to be taken to support the use of AI globally in collaboration with other nations, and presented steps to ensure that AI models are free of biases.
Donald Trump has plainly stated that he’ll revoke Biden’s AI EO on his first day in office.
Donald Trump is going to reshape AI in America
Though revoking Biden’s AI EO is likely to result in the elimination of certain oversight committees and AI positions, the bigger picture, in terms of innovation and competition, is where incoming President Trump’s policy can leave its mark.
One of the more night-and-day differences between Biden and Trump is in their approach to fostering innovation beyond our nation’s borders. Whereas Biden’s EO specifically encouraged cooperation with other nations, Trump has historically taken a hardline stance of promoting America-first innovations and focusing on national security.
Although it’s one of Wall Street’s priciest stocks at the moment, Palantir Technologies (PLTR 2.77%) is primed to be one of the biggest winners of Donald Trump’s second presidency. Palantir’s AI-driven Gotham platform is relied on by the federal government to gather and analyze copious amounts of data, and is also used for mission planning/execution. With national security a key focus for Trump, Palantir’s irreplaceable Gotham platform should receive plenty of long-term contracts from the government.
Trump’s first term in the Oval Office also focused on deregulating complex industries. There’s a good chance this deregulation will translate into more of a hands-off approach to AI product development. Less regulation can pave the way for more merger and acquisition activity within the artificial intelligence arena.
But perhaps the most interesting aspect of Trump’s AI policy is how he and his administration will handle the big technology companies that are currently dominating the AI landscape. In a post on the incoming president’s social media platform Truth Social, where he announced the nomination of Gail Slater to lead the Department of Justice’s antitrust team, Trump said:
Big Tech has run wild for years, stifling competition in our most innovative sector and, as we all know, using its market power to crack down on the rights of so many Americans, as well as those of Little Tech!
Despite favoring deregulation, AI giants like Nvidia, Meta Platforms, and Alphabet may find themselves in the crosshairs of the new administration.
Image source: Getty Images.
The one AI policy Biden and Trump agree on -- and it’s terrible news for Nvidia
Though there are very few things Joe Biden and Donald Trump agree on when it comes AI, one policy that seems virtually certain to continue when Biden leaves office is export restrictions of high-powered AI chips and related equipment to China.
In 2022, the Biden administration laid out guidelines that disallowed the export of Nvidia’s highly sought-after Hopper (H100) chip and A100 GPU to China. This was followed in late 2023 by a second round of curbs to GPU chip exports and included the export of semiconductor equipment used to manufacture AI chips and solutions. Even though Nvidia developed toned-down versions of its H100 and A100 chips, known as the H800 and A800, for China, the Biden administration restricted these chips for export, as well.
Last week, Biden proposed even more stringent AI-chip export restrictions, which he intimated would need to be implemented by the incoming administration.
While it’s unclear if Donald Trump and his team of advisors will follow the Biden administration’s guideline to a “t” when it comes to export restrictions, it’s undeniable that Trump has an America-first focus and will, in all likelihood, keep these restrictions for AI-GPU shipments and semiconductor manufacturing equipment exports in place.
This is noteworthy given that Nvidia generates billions of dollars in quarterly sales from the world’s No. 2 economy.
Look for artificial intelligence policy to be among the first big-issue items Donald Trump tackles in the coming days.
