Tech stocks rally as Democratic midterm wins spark AI regulation concerns
Hyperscalers saw shares surge on Wall Street while AI chipmakers and memory companies declined following US midterm election results.
Wall Street saw divided trading on Wednesday after Democrats won control of both chambers of the US Congress in the midterm elections, according to Mint. While hyperscalers experienced a sharp rally, AI chipmakers, memory companies, and data centre operators saw their shares fall.
Shares of Amazon rose 8 per cent to a three-month high, while Apple and Microsoft each advanced 6 per cent. Alphabet gained 5.7 per cent and Meta Platforms climbed 3.5 per cent. Apple jumped nearly 7 per cent to a record high, despite the company avoiding massive AI spending.
If these gains continue, the five companies could add more than $750 billion in combined market value, Bloomberg reported. However, some investors believe a Democratic-led Congress might increase oversight regarding AI development and the building of data centres.
In contrast, SanDisk shares fell 10 per cent and Seagate Technology Holdings dropped 8.2 per cent at its intraday low. Nvidia slipped 2.5 per cent, CoreWeave fell 11 per cent, and Advanced Micro Devices was down 1.5 per cent.
The election results could impact states with significant planned data centre investments, such as Ohio, Georgia, and Texas, where Democrats won gubernatorial races. Incoming governors in these states have promised more supervision of the sector.
The tech industry has faced volatility due to concerns that massive investments in AI infrastructure may not produce sufficient profits. Bloomberg reported that tech giants plan to spend more than $740 billion this year, compared to approximately $400 billion last year.
