The Democratic Party's victory in the US midterm elections triggered selling pressure across the technology sector, with semiconductor stocks bearing the brunt of the move. Swissquote, in market commentary on the S&P 500, frames the central question bluntly: is the downward pressure driven by the new US political landscape actually justified?

The market's fear is that massive investment plans in AI infrastructure could be called into question or delayed by Democratic legislative initiatives, both at federal and local levels. Swissquote identifies two concrete concerns:

• Federal legislative action against AI in the US Congress.
• Local action targeting the physical deployment of AI infrastructure.

There is little doubt, the analysis notes, that the new Democratic majority in Congress can influence AI-related regulation. Democratic officials at state and local level may also seek to block or slow down the physical rollout of data centers.

Are the concerns exaggerated?

Swissquote argues they may be. First, there is no unified Democratic push to undermine the momentum of AI in the United States. Second, the Republican minority in Congress — and above all the White House — retain powerful means of action and obstruction.

The first structural check is presidential power. Donald Trump holds the right to veto legislation passed by Congress. To override a veto, Democrats would need a two-thirds majority in both chambers, a particularly difficult threshold given their simple majority.

The president can therefore oppose any potential legislation imposing a nationwide moratorium on new data centers or introducing further legal restrictions on the sector. A sweeping federal blockade, in other words, faces a high institutional bar.

Where does the real risk sit?

The second factor concerns states and local authorities — probably the risk that Washington will find most difficult to neutralize. Local authorities hold significant powers over urban planning, zoning and building permits (the municipal approvals required before construction of new facilities).

They can reject certain projects, impose additional requirements or temporarily suspend new developments. Environmental constraints, water consumption and substantial electricity requirements are also potential sources of opposition.

Crucially, the analysis notes, the US president cannot simply overturn a municipal decision to deny a building permit through a presidential veto. Permitting risk is therefore largely immune to White House intervention.

Can Congress act without legislating?

Yes. A Democratic-controlled Congress retains means of pressure that do not necessarily require new legislation. Congressional hearings, investigations into major technology companies and budget debates can increase regulatory uncertainty and complicate certain initiatives of the Trump administration.

For financial markets, Swissquote draws a sharp distinction: the risk of a widespread federal blockade is constrained by presidential powers, while the risk of operational delays to infrastructure projects is not.

Microsoft, Amazon, Alphabet and Meta could maintain their massive investment budgets while facing greater difficulties in obtaining permits, securing electricity connections and accessing the capacity required for their new data centers.

What should equity investors monitor?

The political shift in the United States represents an additional risk factor for the deployment timeline of AI infrastructure, but not necessarily for the structural investment momentum in the sector, Swissquote concludes.

The main issue for equity markets will be to monitor the gap between the CAPEX (capital expenditure on physical infrastructure) announced by hyperscalers — the largest cloud and computing operators — and the actual commissioning of new computing capacity.

That gap, not headline politics, is where the midterm result is most likely to show up in results: budgets intact, timelines stretched.