Political Risk Mitigation in Tech Investments Post-Musk-Trump Incident

The bitter feud between Elon Musk and Donald Trump in 2024 has exposed critical vulnerabilities in tech investments tied to political alliances, reshaping how investors assess geopolitical risks. This clash—rooted in ideological clashes over fiscal policy, federal contracts, and Musk's role in Trump's administration—has created volatility in sectors like EVs, space tech, and semiconductors. For investors, the fallout underscores the need to prioritize geopolitical resilience in portfolios.

The Geopolitical Fallout: Tesla, SpaceX, and Beyond

The Musk-Trump rift began with Musk's $288 million donation to Trump's 2024 campaign and his appointment to lead the Department of Government Efficiency (DOGE). Their split over Trump's “One Big Beautiful Bill” (a $5 trillion tax-and-spend proposal) escalated into public sparring, with Trump threatening to revoke $38 billion in federal contracts tied to Musk's companies.

Key Risks Exposed:
- Tesla's Political Dependency: The EV giant's $7,500 tax credit and federal subsidies faced cancellation threats, wiping $152 billion from its market cap in 2025.
- SpaceX's National Security Role: The Pentagon's reliance on SpaceX for satellite launches and Starlink's military applications created a geopolitical lever. Canceling $22.5 billion in contracts could destabilize U.S. space operations.
- Global Tech Infrastructure: Musk's control of X (Twitter) and Starlink amplified concerns about U.S. tech dominance amid rising geopolitical tensions.

Market Impact: Tech Sector Rebounds and Risks

The feud triggered a shift toward companies insulated from political volatility. While Tesla's stock dropped 15% in 2025, resilient tech firms gained traction:

Winners in the Geopolitical Shift:

1. Avago Technologies (AVGO):
2. Why It's a Play: Its chips power AI, 5G, and data centers, addressing a $120 billion “technical debt” in legacy infrastructure.
3. Valuation: A P/S ratio of 11.43 (within its five-year average) and $30 billion in cash reserves suggest undervaluation.

4. Catalyst: The launch of 2nm chips for AI applications could drive a 2026 price target of $250.

5. Marvell Technology (MRVL):

6. AI Infrastructure Leader: Q1 2026 data center revenue surged 76% to $1.44 billion, fueled by Amazon's custom AI chips and Microsoft's Maia project.

7. Risks to Watch: Regulatory scrutiny of Musk's ventures (Neuralink, X) and geopolitical shifts in chip manufacturing.

8. Taiwan Semiconductor (TSMC):

9. Dominance in Advanced Nodes: Its 3nm processes account for 22% of revenue, with 2nm production ramping in 2025.
10. Geopolitical Edge: 67% foundry market share and $10 billion in AI revenue growth (mid-40% CAGR) justify its long-term bet.

Losers: Politically Exposed Stocks

• Tesla (TSLA): EV tax credit uncertainty and regulatory probes (e.g., NHTSA's investigation into Full Self-Driving) remain headwinds.
• SpaceX Contracts: FAA fines and threats to defense deals create near-term uncertainty.

Strategic Portfolio Adjustments

Investors must balance growth opportunities with geopolitical risk mitigation:

1. Short-Term Plays

• Leveraged ETFs: Use the 2x leveraged Avago ETF (AVGX) for Tesla rebounds (below $280/share) but monitor leverage decay risks.
• Options on MRVL: Buy calls at $50 strikes with $75 ceilings to capitalize on AI infrastructure demand.

2. Long-Term Holds

• AVGO, MRVL, and TSMC: Focus on their global footprints and AI/cloud resilience.
• ON Semiconductor (ON): Stable automotive/industrial revenue and IoT partnerships offer downside protection.

3. Avoidances

• EV Stocks: Until the EV tax credit issue is resolved, avoid Tesla and politically tied rivals like Lucid (LCID).
• Geopolitically Exposed Contracts: SpaceX's federal deals remain risky until regulatory clarity emerges.

Key Takeaways for Investors

• Diversify Geographically: Prioritize firms with global supply chains (e.g., TSMC's 3nm factories in Taiwan) and non-U.S. revenue streams.
• Focus on Core Tech: AI infrastructure, semiconductors, and cybersecurity are less susceptible to political whims.
• Monitor Geopolitical Signals: Track U.S.-China trade dynamics, Starlink's regulatory approvals, and Trump's policy shifts.

Final Analysis

The Musk-Trump feud has become a cautionary tale for investors: tech's future hinges on decoupling from political volatility. While Tesla and SpaceX may recover, the path to stability lies in firms like AVGO, MRVL, and TSMC—those building the tech backbone of tomorrow, insulated from today's political storms.

Investors who prioritize geopolitical resilience now will be best positioned to navigate—and profit from—the evolving tech landscape.