There is a growing sentiment to regulate the technology sector, and that push isn’t isolated to just the U.S., the rest of Europe is planning on changing regulations as well. However, despite this potential crackdown on the fastest growing sector for over two decades, Morgan Stanley remains bullish on many digital advertising companies like Alphabet, Meta Platforms, Snap, and Pinterest. While Morgan Stanley says there is a bear case, the base case is quite positive for tech companies and the odds of extremely tight regulation cracking down are long. The worst case scenario would be if the U.S. adopted some Euro area approaches to regulation, and whistleblowers would become commonplace in tech.
FINSUM: The moderate regulation scenario is already priced into tech stocks in the U.S. so unless Congress fully revamps its regulation tech stock looks to be bullish.