Democrats win big in the midterm elections, driving tech giants' market value up by $750 billions

Aditya Soni/Darshan Kumar R

Reuters, November 4 - On Wednesday, shares of US tech giants soared as Democrats achieved a sweeping victory in the midterm elections. Investors are betting that potential restrictions on new data centers will help these companies strengthen their control over scarce computing resources, while also easing their tight cash flow pressures.

Amazon (AMZN.O) shares surged 7.4%, marking a three-month high, while Meta Platforms (META.O), Alphabet (GOOGL.O), and Microsoft (MSFT.O) gained between 2% and 6.3%, fueling Wall Street’s rally—after a recent sell-off driven by concerns that the artificial intelligence boom would send costs soaring.

Apple AAPL.O, although not investing as heavily in artificial intelligence as other tech giants, has been hit by AI-driven surges in memory chip prices. Still, its share price jumped nearly 7%, reaching a record high.

If the rally holds, the combined market value of these five companies will increase by more than $750 billion.

This rebound marks a dramatic turnaround for cloud-computing giants that had been under pressure—quarterly earnings reports revealed that the AI infrastructure race is transforming these once cash-rich, lightly leveraged companies into heavy spenders increasingly reliant on borrowing. Microsoft is a notable exception, with a cash flow of $18.6 billion.

The rise in share prices came right after the Democrats won a decisive victory in the midterm elections. The Democratic party opposes building new data centers (including in Texas), which could accelerate backlash against these energy- and water-hungry and noisy facilities—despite being at the heart of the AI frenzy, these centers are increasingly unpopular with local communities.

“Conceptually, after the election, future data center construction may see some slowdown or setbacks,” said Art Hogan, chief market strategist at B. Riley Wealth.

“Hyperscale cloud providers (and large tech firms) already own data centers, so these assets are now even more valuable, as there’s no oversupply of data centers. Also, if data center construction slows, capital expenditure (CapEx) growth will also slow. This will undoubtedly affect hyperscale cloud providers.”

These tech giants have been expanding capacity at an astonishing rate, planning to spend more than $740 billion this year, up from about $400 billion last year. This scale far exceeds that of smaller AI cloud rivals like CoreWeave CRWV.O and Nebius NBIS.O.

Shares of smaller companies—including Applied Digital (APLD.O) and Iren (IREN.O)—plunged 6% to 13%, as the market worried that restrictions on data center construction could disrupt their debt-fueled expansion plans. These firms have been spending several times their revenues to cope with ever-growing backlogs of orders.

“For tech investors and AI traders, the biggest concern tonight is Texas—the state is expected to contribute about 25% to 30% of gigawatt-level power and capacity for data centers,” said Dan Ives, senior managing director and tech analyst at Yorkville Ives.

“Now, this process will move forward more steadily, and in the eyes of many investors, that could well be a good thing.”

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