Michael Brown
The recent run up in the stock market—especially for tech stocks—signals a stimulative business climate during the second Trump Administration which should fuel a continued rise for defense tech—the incorporation of new technologies such as AI, cyber, autonomy and space for military applications. The first Trump Administration saw an S&P 500 increase of 50%, a much larger tech stock increase of 138%, and 380% for the Magnificent 7 stocks. Looking forward, the combination of extended rate reductions in the Tax Cuts and Jobs Act (2017), a lighter regulatory environment, and likely lower interest rates with easing inflation all create a positive economic outlook.
This economic outlook provides fertile ground for gains in the defense tech sector which has already been one of the most promising areas for venture investors. Since 2021, venture investment in defense tech totals more than $100 billion, 40% more than the previous seven years combined. The factors driving increased investment are likely to intensify during the next four years: first, rising geopolitical tensions and, second, the technologies which militaries need are increasingly developed by the private sector rather than government labs.
No comments:
Post a Comment