A divided government may be the best midterm elections outcome for Big Tech players spending massive amounts of money to build out AI infrastructure, according to Jefferies.
“A split government and prospects for a national AI policy, rather than fragmented state-level rules, should ensure that the rapid pace of AI innovation continues,” the Jefferies research team wrote in a new note on Monday. “This should disproportionately benefit large, scaled players, especially those that have earned the trust of enterprises and/or consumers.”
The team added, “States are leading AI regulation, but most enacted and proposed measures remain relatively benign. AI safety bills are multiplying in Congress, but they face a narrow path absent a catastrophic event that elevates AI safety concerns. We expect limited policy risk to the AI buildout and model development.”
The biggest tech winners Jefferies sees include:
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Amazon (AMZN): “Benefits regardless of which AI model wins as it has taken a model agnostic, platform approach.”
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Alphabet (GOOG): “Gives more time to catch up in the AI model race with Gemini 4 Pro and beyond.”
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Microsoft (MSFT): “Has the highest trust from enterprises given its pervasive presence in corporate IT shops.”
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Oracle (ORCL): “Emerging as 4th enterprise cloud option, with outsized upside if data center permitting and regulatory hurdles ease.”
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CoreWeave (CRWV): “Rapidly becoming recognized as a leading alternative to megacap hyperscalers with prowess in deploying Nvidia (NVDA) reference architecture and expanding software capabilities.”
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Snowflake (SNOW): “Top 2 vendor for AI data plumbing.”
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Datadog (DDOG): “The importance of observability becomes paramount as agents become more capable.”
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Meta (META): “Renewed consumer and small business momentum with Muse and Meta Business Agents.”
“The president’s party has lost House seats in 18 of 20 postwar midterms. With Trump’s approval near 39% and independents at 24%, we expect a GOP setback,” the Jefferies analysts wrote.
The 2026 midterm elections are coming on Nov. 3, when voters will choose all 435 members of the House and 35 senators. It makes who controls Congress the central political question for investors.
In the stock market, the biggest issue is usually not which party wins, but how much uncertainty there is around taxes, regulation, government spending, and other policies that can affect businesses. This is especially the case as investors look to put capital to work in the remaining years of the Trump presidency.
Markets have historically performed quite well in the year after midterm elections.
