After Donald Trump won the US election in November 2024, there was a frenzy of optimism regarding the S&P 500.
US stocks soared in anticipation of a less strict regulatory environment and potentially more favourable tax conditions. Some analysts were predicting highs above 9,000 points — an eyewatering 64% increase.
But as Trump’s time to take office has drawn closer, uncertainty around trade tariffs prompted an increasingly sombre outlook. Now, many brokers have set their sights on a more realistic 20% gain, with most settling around 6,400 points. Some of the more bearish expect nothing above 6,000, a level below which the index has already fallen.
There’s an incredibly complex and long-established set of conditions that keep global markets in check. It’s a fragile system that seldom reacts well to a spanner being thrown in the works. But some feel the tariff talk is little more than tough negotiating tactics. What eventually transpires may be far less dire than the rhetoric would suggest.
Fortunately, there are some US stocks that are likely to perform well either way. I think one of them is Crowdstrike (NASDAQ:CRWD).
Like a phoenix from the ashes
Let’s be honest, any company that can recover after almost taking down the entire Internet must have something going for it.
After a botched update wreaked havoc on over 8m Internet-connected devices in July last year, Crowdstrike stock tumbled 44%. But even then, it only fell to $217 — the same price it held less than eight months earlier. Fast-forward and it’s almost back where it was as I write (8 January), trading near an all-time high at $359.
Single-handedly disrupting global communications is not a good look. Yet some might say the strength exhibited in its recovery helped it emerge even stronger. It certainly bolstered my faith in the company.
But that doesn’t make it infallible.
To mitigate the fallout, the IT cybersecurity giant rolled out new validation and testing procedures to better safeguard against a similar issue reoccurring. When it announced this last year my initial reaction was ‘too little, too late’. This should never have happened in the first place – the world won’t forget that easily.
Yet here we are.
But price recovery may not tell the whole story. Tech stocks across the board are doing well – particularly those tied to AI – so the growth isn’t that surprising. Ongoing lawsuits from Microsoft and Delta Airlines still hang over the company, not to mention a class action from investors.
The outcome of these suits could be costly, inflicting further reputational damage and hurting the share price. The fallout has already cost the firm $16.8m in losses reported in its Q3 2024 results.
But revenue remains strong at $1.01bn, a 29% year-on-year gain and ahead of analyst expectations. Rather than causing the share price to slump, the negative results simply dampened its growth. The stock seems possibly impervious to bad news!
This is why I’m bullish.
Nobody really knows what will unfold after Trump takes power. Yet even if things take a turn for the worse, something tells me Crowdstrike will find a way to emerge from the turmoil unscathed.
