Andreas here. Happy New Year and Happy Saturday. This morning we look at what may or may not happen in 2025. This isn't so much an attempt to put the future into a crystal ball, but rather an overview of the big topics the DealBook team and I are dealing with. have to do. our radar screen in the new year.
On this list: changes in dealmaking in the new Trump era, the future (or end) of DEI efforts, the growing momentum of workers returning to the office, the evolving China-US relationship, new investments in artificial intelligence, and yes, Elon Musk's role in all of the above. Let us know what you think. And we'll revisit this list at the end of the year.
Deals will flow. Dealmakers almost universally expect a flood of deals under newly elected President Donald Trump, after four years of pent-up activity under President Biden, whose antitrust enforcers questioned a record number of mergers. The more interesting question: What types of companies will make these deals? More mergers and acquisitions in the energy sector seem likely given Trump's support for the sector. Bank deals could also take off: After the regional banking crisis, Treasury Secretary Janet Yellen said the country could benefit from more mergers. Deals could also emerge to address cybersecurity concerns, the impact of GLP-1 drugs, and the fierce AI race.
Media companies will reshuffle. Media executives and their advisers have said for years that the industry needs a drastic overhaul to meet the new reality: a glut of streaming options and the demise of the traditional cable industry. Deals that were effectively considered a no-go under Biden's aggressive antitrust enforcers could finally get the green light under a Trump administration.
Everyone is watching to see what a handful of key players will do next: Will Comcast's move to spin off its cable business hurt others, like Warner Bros. Discovery, inspire you to do the same? Will Paramount use Larry Ellison's deep pockets to acquire streaming companies? Will Rupert Murdoch respond to his failed attempt to change his family's trust by selling Fox, making it bigger or trying to buy out some of his children? Will Trump allow a major media company (or his own company) to buy TikTok?
Big Tech may not catch a break. While corporate America has anticipated a longer line under the Trump administration, Silicon Valley giants may still face a lot of criticism. Several of Trump's picks to lead key regulators — Andrew Ferguson of the Federal Trade Commission, Gail Slater of the Justice Department's antitrust division and Brendan Carr of the Federal Communications Commission — are expected to keep a close eye on Big Tech keep.
Unlike Lina Khan, the outgoing FTC chief whose lawsuits against the market power of tech giants came from a progressive perspective, many of Trump's picks have accused companies like Google and Meta of silencing conservative voices.
What will Elon Musk do with his power? The tech billionaire has been one of the most influential and ubiquitous voices in Trump's ear since the election, and his spot as co-head of the Department of Government Efficiency gives him potentially major influence — some critics say too much — over government agencies that fear its cuts.
But the scope of Musk's agenda remains unclear. He has spent years fighting with Trump allies in defense of the skilled worker visa program known as H-1B, a battle he appears to have won for now. He will also likely push for further deregulation and more openness when it comes to AI and crypto. One unknown: how Musk, who sells many Teslas in China, will influence Beijing's policies.
Managers want employees to return to the office – and politics outside of it. Starting this month, many Amazon employees had to work in the office five days a week, compared to three days a week previously. The tech company's return-to-office mandate has been making waves, and there are signs that office attendance is increasing across industries.
But remote work remains widespread, with about 30 million workers in hybrid or fully remote arrangements. Will other big tech companies follow Amazon's lead in 2025?
In addition to office visits, managers are increasingly taking tough action against employee activism. Starbucks sued a union representing some of its employees after local affiliates posted pro-Palestinian messages on social media (the union has filed a lawsuit). After Google fired dozens of employees last year amid protests related to the company's cloud computing contract with the Israeli government, Google CEO Sundar Pichai told employees that work is not the place to “fight over disruptive issues or to debate politics.” The sentiment appears to be catching on: Major tech companies that saw protests after Trump was elected in 2016 were silent after he was elected in 2024. Will the silence continue?
DEI will fight for his life. In 2024, the programs came under attack from lawsuits, activists like Robby Starbuck and conservative lawmakers. As companies prepare for a Trump administration, some, such as JetBlue and Molson Coors, have identified diversity, equity and inclusion policies as a risk factor in their safety filings. Walmart, Ford Motor and Toyota have rolled back some programs, and others are rebranding their efforts without advertising them, hoping to draw less attention. Fewer companies have publicly fought back, although Costco last month challenged a proposal from activist shareholders seeking an end to DEI efforts.
Infrastructure will become an increasing focus in the AI race. The battle to dominate artificial intelligence is also driving investment in infrastructure to generate the enormous amount of electricity needed. The International Energy Agency predicts that energy demand in data centers could double by 2026.
Some of the tech industry's most prominent executives are investing. OpenAI's Sam Altman, Jeff Bezos and Bill Gates all back nuclear fusion startups. Microsoft and BlackRock launched a $30 billion fund last year to invest in AI infrastructure. Silver Lake, the private equity firm, is spending a lot on data centers.
One name to keep an eye on this year: SoftBank. The Japanese tech investor has reportedly discussed setting up a $20 billion AI investment fund with Apollo, the private equity firm, and SoftBank CEO Masa Son is on the hunt for deals.
Defense technology can have a great year. Trump has promised to end the war in Ukraine. Whether he succeeds or not, the defense technology industry will benefit either way. It's already happening: venture investments in defense startups soared last year and by September had surpassed the total amount invested in 2023. Palantir, a data analytics company, performed extremely well. Its market capitalization has increased nearly fivefold to $180 billion by 2024, operating margins have risen sharply and the company joined the S&P 500 in September.
Others are also benefiting from increasing global uncertainty. Anduril Industries, a California-based defense startup backed by Peter Thiel, the venture capitalist and co-founder of Palantir, announced in August that it had raised $1.5 billion in a funding round that valued it at $14 billion. And Helsing, a German startup that uses AI to process live battlefield data, is one of the best-funded companies in Europe.
If Trump succeeds in ending the war, it is likely that Western defense companies will find opportunities to build up Ukraine's military capacity. If he doesn't, more of their technology can be deployed there. Smaller AI-powered companies are already testing their equipment in real time in a war in which drones and other technology play a major role.
How will Trump take on China, and how will Beijing respond? Trump has promised to increase tariffs on goods from China and accuses Beijing and its companies of unfair competition, among other things. It's the same position he took during his first presidency, when he increased trade restrictions with the world's second-largest economy.
Much uncertainty remains about how Trump's threats will play out once he is in power, but Chinese companies have proven adept at finding ways around previous restrictions. Some moved final production and assembly operations to countries such as Mexico, Vietnam and Malaysia so they could export directly to the United States without paying the 25 percent tariff Trump imposed during his first term. Other companies, such as Temu, the e-commerce company, have set up operations in the US to appear less Chinese and more American. Even after that facade faded, it's still thriving: Temu was the most downloaded free app on Apple's App Store in 2024.
How will Trump's policies affect the economy? Trump's plan to cut taxes and red tape is expected to keep GDP growth steady at around 3 percent this year and boost corporate America's bottom line in the near term. But his pledge to impose tariffs on some of the country's biggest trading partners on his first day in office could seriously hamper global growth in 2025.
Another pressing question is whether Trump will dismantle the Inflation Reduction Act, which would jeopardize billions of dollars in tax credits. That prospect has even prompted some Big Oil executives to lobby Trump hard to enforce the law.
A wild card: inflation. Will Trump's policies reignite this, scaring both the Fed and the Fed And the so-called vigilante union? Keep an eye on 10-year government bond yields, market watchers say. A spike there could force the government to scale back its most ambitious plans to boost growth. Inflation fears have already prompted the Fed to lower its forecast for rate cuts in 2025.
Thanks for reading! We'll see you Monday.
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