Political Turbulence: Navigating Risks and Rewards in Tech & Infrastructure Investments

The public feud between Elon Musk and President Donald Trump has unleashed a storm of uncertainty across technology and infrastructure sectors, with profound implications for legislative outcomes, government contracts, and investor sentiment. As the One Big Beautiful Bill Act (H.R. 1) teeters on the edge of passage, the clash between two of the most influential figures in modern politics has created a volatile environment for industries tied to its provisions. This article examines the risks and opportunities arising from this feud, offering actionable insights for investors.

Legislative Uncertainty: A Double-Edged Sword

The One Big Beautiful Bill Act, which passed the House in late May . 2025, is stalled in the Senate due to internal Republican divisions exacerbated by Musk's vocal opposition. The bill's provisions—including $600 billion in deficit-increasing tax cuts, cuts to EV tax credits, and foreign entity restrictions—have become collateral damage in the Musk-Trump feud. Musk's public denunciation of the legislation as a “disgusting abomination” has galvanized fiscal conservatives like Senators Rand Paul and Ron Johnson, who argue that the bill's deficit trajectory is unsustainable. Meanwhile, Trump's insistence on defending it risks alienating moderates, delaying its passage and leaving critical infrastructure investments in limbo.

Key Provisions at Risk:
- EV Tax Credits: The bill terminates the $7,500 EV tax credit for Tesla and other manufacturers exceeding 200,000 sales by 2025. Musk's opposition highlights the existential threat this poses to Tesla's margins and broader EV adoption.
- Foreign Entity Restrictions: Provisions banning “prohibited foreign entities” (PFEs) from receiving tax credits or supplying materials to U.S. projects could disrupt global supply chains, particularly in semiconductors and EV batteries.
- Debt Ceiling and Defense Spending: The bill's $4 trillion debt ceiling increase and $150 billion in defense funding remain contentious, with Senate Republicans pushing for cuts to Medicare and Medicaid to offset costs.

Government Contracts: A High-Stakes Bidding War

The feud has injected unpredictability into government contract allocations. Musk, who previously held a paid advisory role in the Trump administration, now faces retaliation. Trump's threat to cut Tesla's government contracts—such as those for the Department of Energy's EV charging network—and SpaceX's Starlink air traffic control bid underscores the risks for companies tied to either side.

• SpaceX's Starlink: The Pentagon's $4.9 billion contract for Starlink's satellite internet faces scrutiny after Trump accused Musk of conflicts of interest.
• EV Manufacturing: Competitors like Ford and GM, which support the bill's pro-tax-cut stance, may gain an edge if Tesla's government projects are delayed.

Investors should monitor contract awards closely, as favoritism could shift abruptly if the bill's fate pivots.

Market Sentiment: A Tale of Two Tech Sectors

The feud has bifurcated investor sentiment between sectors aligned with Musk's vision and those favored by Trump's policies.

Losers:

• Tesla: The stock's 14% plunge on June 12—erasing $150 billion in value—reflects fears over lost tax credits and government favoritism. Analysts warn that Musk's political entanglements are now a liability, as investors question his ability to navigate regulatory risks.
• EV Startups: Companies reliant on federal incentives, like Rivian and Lucid, face existential pressure if tax credits expire without extension.

Winners:

• Cybersecurity and Defense Tech: The bill's emphasis on modernizing federal IT systems and DOD cybersecurity creates opportunities for firms like CrowdStrike and Palantir, which benefit from bipartisan support.
• Domestic Supply Chains: The PFE restrictions favor companies reshoring manufacturing, such as Ford's partnership with U.S. battery supplierioneer.

Investment Strategy: Playing Defense and Offense

The Musk-Trump feud demands a dual approach: hedging against legislative volatility while capitalizing on structural trends.

Risk Mitigation:

1. Avoid EV Stocks Tied to Musk: Tesla's valuation (140x forward earnings) is overly reliant on Musk's political clout. Short exposure or underweight positions may be prudent until the bill's fate is clearer.
2. Favor Infrastructure with Bipartisan Support:
3. 5G and Spectrum: The bill's spectrum auctions (Sec. 43101) will benefit telecom giants like Verizon and AT&T, which are insulated from political squabbles.
4. Cybersecurity: Companies like Palo Alto Networks and CrowdStrike are critical to the bill's IT modernization push.

Aggressive Plays:

1. PFE-Resistant Supply Chains: Invest in firms reducing reliance on Chinese suppliers, such as U.S. battery recyclers (Redwood Materials) and semiconductor manufacturers (Intel).
2. Defensive Infrastructure: The bill's air traffic control modernization (Sec. 100008) and renewable energy funding (Sec. 80181) favor utilities like NextEra Energy and aerospace firms like Raytheon.

Conclusion: Ride the Waves, Not the Winds

The Musk-Trump feud is a microcosm of broader political and economic tensions reshaping tech and infrastructure investments. While legislative gridlock and contract uncertainty create short-term headwinds, the One Big Beautiful Bill Act's provisions—when stabilized—could unlock trillions in spending on 5G, renewables, and cybersecurity. Investors should focus on sectors insulated from political volatility while positioning for long-term trends like supply chain reshoring and federal IT modernization. In turbulent waters, anchoring in bipartisan priorities and diversification remains the safest course.

Recommendations:
- Overweight: Cybersecurity (CrowdStrike, Palantir), 5G infrastructure (Verizon), and domestic manufacturing (Ford, Intel).
- Underweight: Tesla, EV startups reliant on federal incentives, and sectors tied to PFE supply chains.

Stay agile—this political storm may yet clear the way for strategic gains.