Voters have just delivered a handsome gift to the largest technology companies 鈥?and it goes well beyond California voters rejecting a billionaire tax proposal. (Now, can all those "billionaire tax refugees" move back?) On Wednesday, shares of Amazon.com (AMZN), Microsoft (MSFT), Apple (AAPL), and Alphabet (GOOG) all climbed together, signaling that investors believe Tuesday's Democratic victories will bring a wave of benefits to these tech giants.
The election saw numerous candidates who opposed AI and data centers win their races. The knock-on effect: if AI data center construction slows down, emerging cloud providers (neoclouds) will be hit far harder than established large-scale cloud players. Companies like CoreWeave and Nebius have compute infrastructure that is far smaller in scale than the legacy cloud giants. Notably, both companies saw their shares tumble sharply on Wednesday. Under the logic that "a rival's pain is my gain," this is good news for top-tier cloud providers such as Amazon.com, Microsoft, and Alphabet. A forced slowdown in AI expansion could even prompt tech giants to trim capital expenditures 鈥?something investors would welcome. (For a deeper look at the implications of Tuesday's election results, readers can check out related articles: "How the Blue Wave Is Shaking AI, Crypto, and the Tech Industry" and "Blue Wave Sweeps the Data Center Industry." They can also watch the TITV interview featuring investor and political strategist Bradley Tusk, nonprofit leader Charles Hua, and Wall Street analyst CJ Muse discussing the ripple effects of the election.)
Of course, the rally in tech stocks is not driven solely by AI factors. Democratic control of Congress could help bring the war with Iran to a close and may also restrain President Trump's frequent use of tariffs 鈥?both of which bode well for large technology companies. There is also a simple market logic at play: markets hate uncertainty, and this election outcome has introduced a degree of certainty, even though it has simultaneously spawned a host of new questions. Even so, the election results carry significant potential upside for the tech giants 鈥?which is somewhat ironic given how many in the tech world spent the past few years sharply criticizing the Democratic Party.
At the same time, a large number of tech workers and technology firms will find the road ahead more difficult. Beyond the emerging cloud providers, chip designers like NVIDIA (NVDA) and memory chip makers such as Micron and SK Hynix also saw their shares sold off, because their revenue growth depends heavily on continued AI data center expansion. Tesla Motors (TSLA) CEO Elon Musk had worked hard to prevent Democratic victories, so he can hardly expect friendly treatment from the party now. However, reports also note that it remains unclear just how much he will ultimately lose. Objectively speaking, it is still too early to draw conclusions (though a journalist's job is precisely to analyze when information is incomplete).
How state-level bans on new data center construction will ultimately play out will take a long time to observe. Some believe that once opponents recognize the value of data centers for local jobs, their attitudes may soften. Cantor's CJ Muse said on Wednesday's TITV program: "I hope the voice of reason ultimately prevails, and people come to understand the importance of AI compute."
The most entertaining part of Wednesday's market reaction was the jokes circulating on X. One highly liked post quipped that the Republican Party is in talks to be acquired by Bending Spoons 鈥?a stroke of genius.
Snap's Community Metric
A small question: is a user who opens an app once a month worth the same as one who opens it every day? The answer seems obvious, right? Every advertising-dependent company (like Snap) would theoretically want highly active users. But Snap disagrees. The company announced Wednesday that it plans to make monthly active users (MAU) its core audience metric, moving away from its long-standing reliance on daily active users (DAU). Snap says MAU represents the overall size of its community. In other words, far more people use Snap at least once a month than use it every day. Snap disclosed 977 million global monthly active users, nearly double its 495 million daily active users. Over the past year, DAU in the U.S. and Europe has been steadily declining (other regions are still growing), which is a negative signal for the company. Still, it is hard not to wonder where this is headed: if monthly active user numbers start to weaken, will Snap's next move be to make yearly active users its core metric?
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