Amazon, Apple and other tech giants rallied on Thursday after Democrats swept the midterms, reversing days of AI-cost selling.
Amazon shares surged 7.4% to a three-month high, while Alphabet, Meta Platforms and Microsoft rose, with gains ranging from 2% to 6.3%. Apple jumped nearly 7% to a record high. It had avoided Big Tech's massive AI spending but faces an AI-fueled surge in memory chip prices.
If their shares keep rising, the five companies could gain more than $750 billion in market value combined. Investors are reassessing the sector, and that potential increase is now in focus.
The rally erased several days of losses sparked by concerns about the AI boom's rising costs. Possible limits on new data-centre projects could strengthen tech giants' control of scarce computing power and ease pressure on strained cash flows, investors saw.
Why investors repriced the sector
In Texas and elsewhere, Democrats who oppose data centres scored landslide midterm wins. The tech giants planned to spend more than $740 billion this year on capacity, up from roughly $400 billion last year. Microsoft stood apart from the other cloud giants, with $18.6 billion in cash flow.
Big Tech gains vs smaller AI infrastructure losses
Big Tech
Post-midterm gains
- Amazon up 7.4% to three-month high
- Apple up nearly 7% to record high
- Meta, Alphabet, Microsoft up 2% to 6.3%
Smaller AI players
Post-midterm losses
- Applied Digital down
- Iren down
- Falls of 6% to 13%
Fears that limits on data-centre projects might disrupt debt-funded growth plans sent shares of smaller companies, such as Applied Digital and Iren, down between 6% and 13%.
The biggest worry of the night for tech investors and the AI trade was around the state of Texas, where ~25%-30% of data-center gigawatts and capacity will come from
Conceptually, post-election, there may be a bit of a slowdown or some bumps in the road for future data-centre build-out
The political backdrop
The Independent reported that Democrats reclaimed the House and Senate in the midterm elections. Many AI data-centre proposals appeared on ballots in the November 3 election, and most Americans voted against them, the results showed.
- Before electionAI-cost selling
Days of selling driven by fears over the AI boom's soaring costs.
- 3 NovMidterm results
Democrats reclaim the House and Senate; many AI data-centre issues defeated at the ballot.
- ThursdayTech rally
Amazon, Apple and other giants surge; smaller AI players plunge.
- One day afterAI-regulation calls
Rep. Yassamin Ansari calls for a pause on advanced AI development.
One day after the sweep, Rep. Yassamin Ansari of Arizona called for a pause on advanced AI development, regulation of the industry and a ban on artificial superintelligence. Elon Musk shared her post and wrote: "It's a Brave New World."
What the result means for healthcare
Democrats' victories could affect Americans' insurance, prescription drug costs and coverage, health policy experts and former White House advisers said. If Democrats control the House and Senate, they can push to restore the enhanced Affordable Care Act subsidies and reverse cuts to Medicaid.
Millions faced premium bills two or three times higher when the enhanced ACA federal subsidies expired at the end of last year, and about 3 million people dropped coverage. ACA premiums are rising by double digits again for 2027. It's the second year in a row.
One of the dangers of big election victories is people get cocky and they overreach and they fail to deliver on what people actually care about
Before Tuesday's election, Trump said he would call himself "Mr. Veto" if Democrats gained control of Congress, but on Wednesday said he would "probably" get along with them.
What we know
- Amazon, Apple, Meta, Alphabet and Microsoft are on course to add more than $750 billion in combined market value if gains hold.
- Smaller players including Applied Digital and Iren plunged between 6% and 13%.
- Democrats reclaimed the House and Senate in the midterm elections.
Still unclear
- Whether the tech gains hold and the more than $750 billion in combined market value is actually added
- How far data-centre construction curbs will go and at what pace build-out proceeds
- Whether Democrats and Trump can agree on healthcare legislation, given his veto threat
- The outcome of the Kansas governor's race, which remains too close to call
Ten states still lack the ACA's full Medicaid expansion. Georgia, Texas and Wisconsin elected Democratic governors on Tuesday, while the race in Kansas remains too close to call.
Investors will watch whether the more than $750 billion in combined market value holds and how far any data-centre construction curbs actually go. That will test the rally's durability.
