During Donald Trump’s first year back in office, the tech sector experienced remarkable growth. The S&P 500, which tracks the largest companies in the U.S., gained 16% by January 2026. This was a continuation of the upward trend seen in his first term, where the S&P 500 surged 23.7% in 2017. The NASDAQ, heavily weighted with tech stocks, posted an impressive 137.6% gain during Trump’s first term, marking the best return since 1981.
The Tax Cuts and Jobs Act played a considerable role in this growth. It reduced the corporate tax rate from 35% to 21% in 2017, leading to a surge in corporate earnings and double-digit profit growth in 2018. Companies used this extra cash for share buybacks, boosting stock prices. Small-cap stocks, which are generally smaller companies, also saw benefits from these tax cuts.
The Tax Cuts and Jobs Act significantly boosted corporate earnings, leading to stock buybacks and benefiting small-cap stocks.
Technology companies were the biggest winners. Apple shares skyrocketed by 320% since the 2016 election. The NASDAQ hit record levels, fueled by tax cuts and deregulation. Other tech giants like Amazon and Microsoft saw their stocks climb higher than the S&P 500. Tesla also set new highs following Trump’s election victory.
Despite the overall success, the first year featured both record highs and unexpected pullbacks. The Nasdaq Composite finished at record levels 36 times, while the Dow Jones registered 23 all-time peaks. The S&P 500 recorded 42 all-time closing highs since January 20, 2025. Market volatility driven by Trump’s tweets and trade policies continued to create fluctuations, adding an element of unpredictability to the tech sector’s growth. Additionally, the U.S. GDP growth was expected to grow by 2.5% or more for 2025, further supporting the tech industry’s upward trajectory.
The economic backdrop was also encouraging. The unemployment rate dropped to 4.4% in December, the lowest level in two years. Inflation cooled to an annual rate of 2.7%. This stability helped investors feel more confident, even as they navigated political headlines.
