Trump-backed 'big beautiful bill' unleashes billions for Big Tech. How four of our megacaps benefit

From what the evidence shows, What's particularly noteworthy is The "big beautiful bill" — championed by President Donald Trump and signed on Independence Day — is shaping up to be a windfall for Big

The measure — officially called the "One Big Beautiful Bill Act," or OBBBA for short — restores three tax visions from the 2017 Tax Cuts and Jobs Act (TCJA) from Trump's first administration

This leads to the conclusion that se visions don't lower statutory tax rates

Nevertheless, But, as Morgan Stanley noted, they will accelerate deductions, which could potentially drive "effective cash tax rates back toward historical lows. " That, according to the analysts, could "unlock billions of free cash flow" this year for companies, including names Amazon, Apple, Meta Platforms, and Microsoft, which all report earnings this week

Additionally, While the OBBBA visions are valuable for the entire community, large firms, in particular, benefit, according to Morgan Stanley, due to "massive R & D (re and development) and infrastructure investment in areas AI, compute, data centers, and cloud platforms (this bears monitoring). " The analysts at Morgan Stanley estimated that companies' FCF — or cash a company generates from its operations after accounting for necessary investments to maintain or expand the — "could inflect this quarter," as companies adjust to the new legislation

That extra liquidity will give them "more flexibility to continue to deepen their competitive advantage in Generative AI and der more free cash flow to investors," they wrote in a recent note to clients, in this volatile climate

Moreover, A key feature of OBBBA's visions is that they're permanent, which establishes greater policy certainty, according to Travis Riley, a principal tax firm Baker Tilly. "That makes it great for planning," he stressed, viding a more stable environment for where mega-caps' AI-driven capital investments can be allocated, in light of current trends

On the other hand, Furthermore, This stability drastically differs from the temporary visions under the previous TCJA that were set to eventually expire, in light of current trends. "Everyone in the tax community knew this was horrible tax policy and that it was going away, but no one was sure the timing and mechanics of it," explained Riley, who leads Baker Tilly's re and development tax credit services

At the same time, Before the enactment of the OBBBA, the law required es to capitalize and take domestic R & D costs over five years instead of fully deducting those expenses in the year they were incurred

Nevertheless, "Before this bill, we were bably the only first-world country that penalized companies to do re and development, which is interesting in the sense that the U

Is one of the leading innovators," said Kunaal Patel, principal of tax services at Baker Tilly

Moreover, Companies can now take that full R & D expense on those deductions, meaning, their overall cash liability "should decrease dramatically in 2025 and going forward," he added

Furthermore, As Morgan Stanley puts it, these OBBBA changes allow es to "now reliably factor full bonus depreciation into long-term capital planning and investment decisions

However, However, " These two visions together – R & D and bonus depreciation – "significantly lower current cash tax obligations by accelerating the timing of cash deductions," analysts wrote (this bears monitoring)

TCJA also placed new limits on how much interest es could deduct

According to the Tax Foundation, a Washington think tank, this change vides "tax relief for firms dealing with debt-financed investment in a higher interest rate environment, in today's financial world

Additionally, " To be sure, while the OBBBA should boost FCF, investors should continue to prioritize the companies' fundamental drivers of cash flow generation, especially since the timing of these tax changes won't impact their generally accepted accounting principles (GAAP) earnings-per-

Moreover, Rather, it's a "timing benefit from the pull forward of future cash tax savings rather than a structural change in free cash flow generation," according to Morgan Stanley

On the other hand, This means these companies will recognize more cash flows upfront and less later. "The new bill should mote a lot of domestic investment by big and vide a positive trickle-down effect to the rest of the economy," Jeff Marks, director of portfolio analysis for the. "Although, some of the boost to free cash flow is accounting-based, it should support the multibillion-dollar repurchase grams of these large companies. " Here's a look at how much and in what ways Amazon, Apple, Meta, and Microsoft (in alphabetical order) stand to benefit from the three major tax visions of the OBBBA

AMZN YTD mountain Amazon YTD Amazon stands to be the "largest beneficiary" thanks to its massive capital spending on data centers, logistics infrastructure, and re and development, particularly in cloud computing

While some of this may be returned to holders, analysts say the real impact is in Amazon's ability to double down on next-generation investments, in light of current trends

That includes everything from same-day dery and robotics in its retail, to chip development and infrastructure expansion in its Amazon Web Services (AWS) cloud unit (this bears monitoring)

The analysis reveals OBBBA would also give Amazon room to scale its partnership with AI firms Anthropic. "This's more ly to give Amazon the flexibility to continue in its moats, especially in areas generative AI, logistics and grocery," analysts said

AAPL YTD mountain Apple YTD Apple is expected to get a $20 billion boost to FCF over the next four years, according to Morgan Stanley

Still, Morgan Stanley sees room for Apple to invest "on the margin," particularly in areas AI infrastructure, iPhone manufacturing shifts, and new nology health or robotics

The analysts said the bill gives Apple "more cash optionality," but expects most of its plans to stay the same

Analysts believe Meta is more ly to reinvest a good chunk of that tax benefit into its infrastructure buildout to support massive AI computing clusters, given current economic conditions

MSFT YTD mountain Microsoft YTD The OBBBA could boost Microsoft's free cash flow by $10 billion over the next year — a 12% jump from previous forecasts, according to Morgan Stanley

However, the analysts don't expect this to change Microsoft's game plan

Additionally, Conversely, With more than $80 billion already on its balance sheet and another $130 billion to $150 billion in annual operating cash flow expected, the company "is not cash constrained," they said

Furthermore, This suggests any extra funds might be used for opportunistic acquisitions under the current administration. (Jim Cramer's Charitable Trust is long AMZN, META, MSFT, AAPL (an important development)

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