NEW YORK (Web Desk) - Shares in major US technology companies surged on Wednesday after Democrats’ midterm election victories, as investors bet that possible restrictions on new data-centre construction could strengthen established firms’ control over scarce computing capacity and ease pressure on cash flows.
Amazon shares rose 7.4% to a three-month high, while Meta Platforms, Alphabet and Microsoft gained between 2% and 6.3%, helping Wall Street recover after days of selling driven by concerns over the rising costs of the artificial intelligence boom.
Apple, which has avoided the massive AI spending of its peers but has been affected by rising memory-chip prices, gained nearly 7% to a record high. If the gains hold, the five companies are set to add more than $750 billion in combined market value.
The rally reversed recent losses among major cloud companies, whose quarterly results showed that the AI infrastructure race was turning cash-rich, low-debt businesses into heavy spenders increasingly reliant on borrowing. Microsoft was a notable exception, reporting $18.6 billion in cash flow.
The gains followed sweeping Democratic victories in midterm races, including in Texas, where some winners oppose data centres. The results could accelerate opposition to the facilities, which consume large amounts of power and water and have become unpopular in some communities.
Art Hogan, chief market strategist at B. Riley Wealth, said the election could slow or complicate future data-centre construction. He said existing facilities could become more valuable if new capacity is harder to build, while a slower expansion pace could reduce capital spending by major technology companies.
The tech giants plan to spend more than $740 billion this year, up from about $400 billion last year, far exceeding the spending of smaller AI cloud providers such as CoreWeave and Nebius.
Shares of smaller companies, including Applied Digital and Iren, fell between 6% and 13% amid concerns that restrictions on data-centre construction could disrupt their debt-funded expansion plans. These companies have been spending several times their revenue to meet a growing backlog of orders.
Dan Ives, a senior managing director and technology analyst at Yorkville Ives, said Texas was a major concern for technology investors because an estimated 25% to 30% of data-centre capacity was expected to come from the state.