President Trump’s most prominent Silicon Valley supporter, billionaire Peter Thiel, has told friends and associates that he plans to sit out this year’s presidential campaign because he thinks re-election is increasingly a long shot, people familiar with the matter say.

Mr. Thiel, a venture capitalist and co-founder of PayPal Holdings Inc., spoke at the Republican National Convention in 2016, where he criticized the state of the economy and described Mr. Trump as a man set to rebuild America. One of the few tech leaders to…

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