Microsoft (MSFT) and Amazon (AMZN) shares surged Wednesday, adding about $400 billion in combined market value as investors reassessed cloud demand, AI spending and potential limits on data-center expansion.
Microsoft and Amazon closed 6.68% and 6.12% higher, respectively.
John Belton, a portfolio manager at Gabelli Funds, told MarketWatch that "any incremental constraint on future data-center capacity" could give established cloud providers greater pricing power. Belton said stronger pricing could lift profitability at Microsoft and Amazon, particularly as demand for computing resources continues to outpace available supply across the industry.
Ivan Feinseth, an analyst at Tigress Financial Partners, attributed the rally to post-election relief, lower policy uncertainty, renewed enthusiasm for AI and cloud computing, and short covering.
Feinseth said investors positioned for a technology selloff were "unwinding" defensive trades. He called the election a near-term catalyst, while emphasizing that longer-term results will depend on "more sustainable drivers," like AI demand and infrastructure investment.
AI Spending Raises Return Concerns
That supply question became more complicated after the Democratic Party's 2026 midterm victories in the House and Senate. Analyst Dan Ives described the outcome as a "big hurdle for AI buildout," potentially affecting the pace of data-center construction and the broader AI trade.
Microsoft and Alphabet Inc. (GOOGL) (GOOG) reported quarterly capital spending below analyst expectations, with Microsoft posting $45.2 billion versus $50.7 billion expected and Alphabet spending $51.36 billion against $55.09 billion. The shortfalls have raised concerns about whether hyperscalers can sustain AI infrastructure spending, potentially affecting demand for neocloud providers.
Earlier this month, Alphabet Inc. (GOOG) (GOOGL) Google's global head of energy and power, Amanda Peterson Corio, dismissed concerns about an AI infrastructure glut, saying the risk of underbuilding data centers is greater than overbuilding. She said Google has clear customer demand and expects its current infrastructure investments to be fully utilized.
Price Action: Year-to-date, Alphabet stock declined 8.44%, while Amazon surged 15.25%, as per market data. During Thursday's pre-market trading session, the stocks were trading up 0.85% and 1.48%, respectively.
