Democrats' midterm sweep fuels $750 billion Big Tech rally
AMZN•Shares of Amazon, Meta Platforms, Alphabet, Microsoft and Apple rallied after Democrats won midterm elections, as investors bet opposition to new data-center construction could limit overbuilding and slow spending. If gains hold, the five companies are on course to add more than $750 billion in combined market value.
1. Tech shares rebound
Amazon shares surged 7.4%, while Meta Platforms, Alphabet and Microsoft gained between 2% and 6.3%. Apple rose nearly 7% to a record high. The gains followed days of selling driven by concerns about the AI boom’s rising costs.
2. Data-center outlook shifts
Investors responded to Democratic midterm victories, including in Texas, where winners oppose data centers. Investors bet that potential limits on new construction could make existing facilities more valuable and ease pressure on cash flows by slowing capital spending. Art Hogan of B. Riley Wealth said there may be a slowdown or bumps in the road for future data-center construction.
3. Spending and smaller players
The tech giants plan to spend more than $740 billion this year, up from roughly $400 billion last year. Shares of smaller data-center companies Applied Digital and Iren fell between 6% and 13% on concerns that construction curbs could disrupt debt-funded expansion plans. Dan Ives of Yorkville Ives said Texas accounts for about 25% to 30% of data-center gigawatts and capacity, and construction may proceed at a more measured pace.
