Midterm election backlash may bolster tech giants over smaller AI competitors

The recent midterm election results, which saw voters signal a desire to curb new data center construction, may inadvertently benefit major tech firms like Amazon, Google, and Microsoft. This trend was evident as the shares of these established operators rose on Wednesday, while smaller AI cloud providers such as CoreWeave and Nebius experienced declines. This divergence suggests that increased regulatory hurdles could solidify the market position of the largest players. Goldman noted that the election outcomes might impose restrictions on approximately 45% of planned US data center expansion. In Texas, the victory of Democrat Gina Hinojosa over Republican Gov. Greg Abbott promises an immediate pause on state data center development. Analysts point to the increased value of existing capacity. Macquarie analyst Paul Golding predicted that the approved, permitted pipeline would become significantly more valuable as demand for scarce data center capacity rises. This aligns with observations from Silicon Data, which has shown steady increases in the cost of renting Nvidia GPUs this year, a dynamic supported by Circular Technology's global head of research, Brad Gastwirth.