US midterms widen AI divide as data centre curbs favour Microsoft and Amazon

US midterm election results could widen the gap between large tech firms and smaller AI infrastructure companies, as potential data centre restrictions and rising borrowing costs favour Microsoft and Amazon. Democratic victories in key races have raised concerns about tighter building rules. In Texas, Democratic governor-elect Gina Hinojosa has proposed a pause on new data centre permits, though existing projects would continue. Microsoft and Amazon shares rose over 6% on Wednesday, while AI firm CoreWeave fell around 10%. JPMorgan's James Sullivan said higher borrowing costs hurt smaller neoclouds, while hyperscalers benefit from diversified revenue. Smaller firms like CoreWeave, Nebius, and Iren saw shares drop at least 30% in October amid financing concerns. Nomura warned projects scheduled for 2028 could face delays from tighter regulations, while financially stronger hyperscalers may acquire assets from struggling smaller operators.