Topline
As the Biden administration prepares to unveil its “Build Back Better” plan—a sweeping set of infrastructure spending proposals designed to shore up domestic manufacturing, modernize roads, bridges and utility systems and begin the transition to clean energy—here are the stocks and sectors that stand to benefit, according to analysts at Bank of America.
U.S. President Joe Biden holds a semiconductor during his remarks before signing an Executive Order … [+]
Key Facts
Companies that make the equipment used to manufacture semiconductors—the essential computer chips found in everything from cars to smartphones—are “ideally positioned” to take advantage of the Biden administration’s push to reduce the United States’ reliance on computer parts manufactured overseas, Bank of America says.
The analysts identified semiconductor capital equipment vendors Applied Materials, Inc., KLA Corporation, Lam Research Corp., Teradyne and Nova Measuring Instruments as the likely winners in that category.
Biden’s plan is also expected to focus on expanding 5G and broadband infrastructure in the United States.
Those improvements, combined with strong sales of 5G smartphones during the pandemic, means that companies like Marvell Technology Group (a supplier to Samsung, Nokia and Ericsson), and 5G radio companies Analog Devices and Qorvo Inc. could see a boost in the months ahead, according to Bank of America.
That’s not to mention Biden’s push to make American manufacturing competitive on the global stage again, which Bank of America expects to benefit industrial companies like Analog Devices, Texas Instruments, and Microchip because of their large exposure to that market.
Biden’s is also expected to include incentives to encourage the adoption of electric cars, which means that ON Semiconductors and NXP Semiconductors as well as Cree Inc., which makes materials used in electric vehicle systems and charging stations, could be poised to profit, according to the analysts.
Big Number
$4 trillion. That’s how much new spending Biden’s proposals could authorize, more than $3 trillion of which may be financed with tax hikes on big companies and the ultra-wealthy, the Washington Post reported this week.
Crucial Quotes
Combined with a vaccine rollout that is gaining momentum, Biden’s infrastructure push is “fueling optimism that the U.S. economy will bounce back much faster than initially expected,” OANDA market analyst Sophie Griffiths wrote in a note this week. S&P Global expects the plan to inject $5.7 trillion into the economy and create 2.3 million jobs by 2024.
Key Background
The Build Back Better plan will be split into two separate proposals. The first will cover the country’s physical infrastructure—roads, railways, water and sewer systems, and broadband as well as investments in manufacturing and clean energy. The second will focus on the “care economy”—jobs, healthcare and childcare. Some have speculated that this two-pronged approach was to ensure that Republican opposition to some of more progressive policies likely to be included in the care economy section, like free community college and universal pre-kindergarten, would not derail the elements of the plan more likely to draw bipartisan support. White House press secretary Jen Psaki said over the weekend that rebuilding roads and railways is “not a partisan issue.”
Surprising Fact
Biden’s infrastructure efforts will come amid a severe global shortage of semiconductors that forced some North American automakers to slow down production earlier this year.
What To Watch For
Biden is expected to unveil new details about his first set of infrastructure proposals in a speech in Pittsburgh on Wednesday. Details about the second portion of his Build Back Better agenda are expected next month.
Further Reading
Everything We Know About Biden’s Massive Infrastructure Plan Coming This Week (Forbes)
Biden To Split New $3 Trillion Recovery Plan Into Two Proposals, With Infrastructure First On Deck (Forbes)
Who Will Be The Biggest Losers From Biden’s Tax Hikes? (Forbes)
Here’s What Biden’s Supply Chain Executive Order Means For U.S. Businesses (Forbes)
