Key Takeaways
- Apple, Alphabet, Amazon, Microsoft and Meta were on pace to add nearly $1 trillion on Wednesday after Democrats won Congress. On Thursday, the four hyperscalers gave back 2% to 4%.
- New York Assemblymember Alex Bores says investors bet on tight limits on new data centers and no rules that hit Big Tech’s profits.
- Trump’s veto threat makes new federal AI laws unlikely before 2029. California’s governor-elect is a separate risk.
- Microsoft trades near its one-year average forward P/E, leaving little room for rules that cut expected profits.
On Nov. 4, investors cheered the Democratic sweep by piling into Big Tech. Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN) and Meta Platforms (META), along with Apple, were on pace to add nearly $1 trillion in market value, by Bloomberg’s count, and Microsoft closed at a record.
Democrats ran on slowing the AI build-out. Investors read that as a brake on the spending that has pushed free cash flow negative at Amazon, Alphabet and Meta. Neoclouds like CoreWeave sank.
On the Nov. 5 episode of Prof G Markets, Alex Bores, a New York Assembly member and author of the RAISE Act, said the move “expresses a bet that there will be stringent regulation on building new data centers, that that capacity will be curtailed, but that there won’t be regulations that impact the profits of the tech companies and the AI companies.”
He doesn’t buy the second half, saying it doesn’t match what he hears from voters or elected officials.
By Thursday, the mood had turned. The Nasdaq 100 fell about 6% in a broad chip and AI selloff, and the four hyperscalers gave back 2% to 4% each.
Big Tech Has a Lot of Profit to Protect
The money at stake is the earnings growth Wall Street already expects. Consensus has Alphabet’s normalized EPS rising from $10.81 in 2025 to $18.23 in 2028:
That’s 69% more in three years.
Investors aren’t paying much of a premium for that growth. Microsoft trades at 26x forward earnings, a touch above its one-year average of 25x and well below the 31x it hit last November:
At that multiple, the price assumes the profit path holds, with little room for a rule that cuts into it.
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Washington Is the Harder Place to Pass New AI Laws
New federal laws are the easier part of the bet to defend. Before the vote, President Trump told the New York Post’s Miranda Devine, in a clip aired on Fox News, “I guess I’ll become ‘Mr. Veto’” if Democrats won.
Pentagon technology chief Emil Michael said Nov. 4 at The Wall Street Journal’s tech conference that the government will lay out which laws and regulations apply to AI labs later this month.
Bores allowed that most AI rules proposed so far, outside data centers, have been “tremendously light touch.”
Alphabet and Meta Sit Closest to Sacramento
California elected Xavier Becerra governor on Tuesday, and a reporter on The Decoded Podcast’s election-night episode said Becerra supports looking at criminal charges for AI executives when agents go rogue, and that California could sue AI companies headquartered there.
Alphabet and Meta are both based in California, and Meta has plenty of margin to lose. Its operating margin climbed from 28.8% in 2022 to 41.4% in 2025:
Big Tech Got Half the Bet Right
Investors got the building half right. Voters favored limits on data centers in 40 of 41 local ballot contests on Tuesday, approving 27 restrictions and rejecting 13 pro-development measures.
The profit half is harder to call. Trump’s veto threat makes new federal AI laws hard to pass through January 2029, but it can’t stop congressional investigations or enforcement of existing laws. California is a separate risk, and Trump has no veto there.
Becerra is still looking into the idea. If California puts a price on running AI agents, the profit estimates behind this rally will have to come down.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
