Who Are the Company Winners and Losers from Actions by Elon Musk’s DOGE?

The Division of Authorities Effectivity, the Elon Musk-led group tasked with slashing federal spending, has been on the minds of executives currently. Prior to now month, DOGE has appeared within the transcripts of over 50 earnings calls and conferences tracked by knowledge supplier AlphaSense. 

Executives at protection firms and authorities contractors have fielded many of the DOGE questions. Regardless of their publicity to authorities spending, many have insisted that the cost-cutting initiative is a chance for his or her firms. 

Federal Contractors Downplay Threat, Tout Alternative

Shares of Iron Mountain (IRM), a knowledge storage and data administration firm, declined final week after Musk ridiculed that the U.S. authorities shops and processes retirement paperwork in a Pennsylvania mine operated by the corporate. However Iron Mountain’s CEO, Invoice Meaney, mentioned on the corporate’s earnings name two days later that DOGE is extra of a possibility than a danger. 

He mentioned the corporate receives $10 million in income for storing bodily authorities paperwork, however about $130 million for offering businesses with knowledge heart and digitization providers. “As the federal government continues to drive to be extra environment friendly, we see this as a continued alternative for the corporate,” Meaney mentioned. 

Different executives have echoed Meaney’s level. Lynn Moore, the CEO of Tyler Applied sciences (TYL), a software program and providers firm that caters to the general public sector, additionally downplayed the menace posed by DOGE. “We consider expertise is in the end the best driver of effectivity,” mentioned Moore. 

Analysts Count on Software program Corporations To Profit

Software program firms are anticipated to be among the prime beneficiaries of Musk’s effectivity push. Financial institution of America analyst Mariana Perez Mora recognized knowledge analytics agency Palantir (PLTR) as a possible winner. “AI and knowledge analytics are important to unlock well timed and better-informed determination making,” Perez Mora wrote in a be aware to purchasers final week. 

Jefferies analysts in a be aware on Monday argued DOGE may very well be a “web optimistic” for ServiceNow (NOW), which gives workflow administration software program. “Fed IT groups are being requested to drive productiveness features throughout the board,” the analysts wrote after attending the ServiceNow Federal Discussion board outdoors Washington, D.C., final week. “The suggestions is that this can require platform consolidation and leaning into software program, which might make NOW a main beneficiary.” 

Protection Trade Sees Potential For Extra Army Spending

Whereas legacy protection contractors corresponding to Lockheed Martin (LMT) and Huntington Ingalls Industries (HII) are among the many S&P 500 firms with the best publicity to authorities spending, executives have downplayed the danger of DOGE-led price range cuts.

Huntington CEO Christopher Kastner mentioned at an business convention on Tuesday that he anticipates DOGE’s efforts to streamline the Pentagon will profit the corporate. “Simplifying the oversight within the Pentagon, I believe, is one thing that may be optimistic. I believe that is the preliminary focus,” he mentioned. He additionally famous the Trump administration’s deal with containing Chinese language affect within the Pacific may very well be a tailwind to the corporate, which is America’s largest shipbuilder. 

Protection executives have additionally mentioned that lowering non-military spending and streamlining the Pentagon paperwork might liberate cash that, as an alternative of being saved, is spent on weapons. “In the event that they minimize prices in sure areas—I’ll name it on your complete price range—that presents a possibility to place a few of these monies again into protection,” mentioned Lockheed Martin CFO Jesus Malave at an business convention final week. 

One Loser So Far: Tesla?

So if everyone’s a DOGE winner, then who’s a DOGE loser? Properly, one of many largest losers on Wall Road thus far has been Tesla (TSLA), the EV maker that Musk leads as CEO. Tesla shares have fallen about 15% since Trump’s inauguration.

A number of elements have contributed to the decline, together with tariffs and the inventory’s run-up between Trump’s re-election and inauguration. However DOGE, and the time Musk has devoted to it, are additionally weighing on the inventory, based on Wedbush analysts. 

“The autonomous and robotics battle for market share is in full power each within the US and China and plenty of on the Road view Musk spending ‘100% of his time’ with DOGE as making a detrimental notion round his Tesla focus,” wrote lead Tesla analyst, Daniel Ives, in a be aware final week. 

Wedbush, nevertheless, continues to be extraordinarily bullish on the inventory. The agency’s $550 worth goal is greater than 50% above Tesla’s closing worth on Tuesday.

“Musk has all the time been capable of stability his numerous initiatives higher than some other CEO we’ve seen and the innovation and tech machine at Tesla is definitely accelerating into an autonomous and robotics future regardless of rising skepticism round Musk’s DOGE balancing act,” mentioned Ives.