Healthcare is set to gain from innovative artificial intelligence
For the healthcare sector, the benefits from new policy changes are perhaps not so clearcut. The TrumpRx plan, launched in February to allow consumers to buy prescription medicines directly from pharmaceutical companies, has achieved only limited success. The more significant development has been the Food and Drug Administration's increasingly technology-driven approach to approving new medicines and treatments. Greater acceptance of AI-assisted drug development, an expanded use of real-world evidence and less reliance on animal testing all have the potential to lower drug research costs and accelerate innovation. The FDA announced in April that it had achieved the first-year goals of its roadmap to modernise drug development, including qualifying its first AI-based drug development tool and expanding the use of alternatives to animal testing methods. With around 90% of animal-tested drugs failing to make it to final development, even modest improvements in efficiency could significantly reduce costs and improve returns for innovative biotechnology companies.
The energy sector is key
Energy policy has also shifted decisively. The Trump administration is stridently pro-fossil fuel and has prioritised expanding domestic oil and gas production, streamlining permits and reducing environmental regulation, arguing that cheaper and more abundant energy strengthens America's economic competitiveness. The repeal of the Environmental Protection Agency's 2009 Greenhouse Gas Endangerment Finding was presented by the administration as removing more than $1.3 trillion of regulatory costs, although the measure remains subject to legal and political debate.
Beyond traditional oil and gas production, one of the biggest beneficiaries from the new regime may in fact prove to be electricity infrastructure. AI is creating enormous new demand for power, as data centres require vast amounts of reliable electricity. Utilities firms, pipeline operators, power generation companies and grid infrastructure providers could all benefit from this trend.
Renewed focus on industrials and defence
Meanwhile, industrial companies are benefiting from one of the largest waves of domestic manufacturing investment in decades. Construction spending on new US manufacturing facilities has more than tripled since 2022 as companies invest in semiconductor plants, battery factories and advanced manufacturing. Reshoring manufacturing, upgrading infrastructure and the expanding demand for data centre construction all require engineering firms, automation specialists, construction equipment manufacturers and electrical component suppliers. Many of these businesses receive less attention than the technology companies driving the AI revolution, but they are essential to building the physical infrastructure that supports it.
Defence remains another area of structural strength. Rising geopolitical tensions have encouraged higher military spending not only in the United States but across NATO and much of Europe. NATO members spent around $1.5 trillion on defence in 2024, with every member increasing expenditure, while the US alone accounted for almost $1 trillion – around 37% of global military spending. Demand for aerospace manufacturers, missile systems, cybersecurity providers and defence technology companies appears likely to remain supported regardless of political leadership, making the sector one of the more durable long-term investment themes.
The sectors facing challenges
Of course, not every policy change creates winners. Tariffs continue to create uncertainty, particularly for manufacturers with global supply chains. Also, higher rates of government borrowing could keep interest rates elevated for longer, which will affect every business reliant on loan funding. Inflation also remains a key risk, particularly if stronger economic growth coincides with persistent fiscal deficits.
For investors, however, the bigger story extends beyond any individual policy announcement. The United States continues to benefit from structural advantages that few other economies can match: deep capital and energy reserves, a world-leading tech industry, strong demographics and relentless productivity. President Trump's reform agenda has sought to build on these strengths through deregulation, targeted tax incentives and a more business-friendly policy environment.
Whether every initiative succeeds remains to be seen. But taken together, they help to explain why the United States continues to power ahead in comparison with many of its developed market peers.
