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A split government in the upcoming 2026 US midterm elections could prove advantageous for prominent Big Tech stocks, according to Jefferies analysts. This could include Amazon, Microsoft, Meta, and several other companies that have been making significant investments in AI infrastructure. The analysts believe a split government could facilitate the implementation of a unified national AI policy rather than having multiple state-level regulations.

Such an environment would likely foster continued AI development and innovation at a faster pace. The firm also highlights that large technology companies with strong businesses and established trust among consumers stand to gain the most from this scenario. It should be noted that while states are currently taking the lead in AI regulation, most rules are relatively limited and are not expected to significantly impact the industry.

Additionally, Congress has been considering AI safety bills, although these measures may face challenges unless a major event heightens the political focus on AI safety. However, Jefferies maintains that there should be minimal policy risk for AI infrastructure spending and model development. The investment firm anticipates benefits for several key tech and AI-related stocks, such as Amazon, Alphabet, Microsoft, Oracle, CoreWeave, Snowflake, Datadog, and Meta.

Amazon's model-neutral, platform-based approach positions it well to capitalize on a less restrictive policy environment. Alphabet's Gemini 4 Pro and future versions could also benefit from increased competition in the AI model race. Microsoft's strong relationships with enterprise customers and Oracle's growing presence as a major enterprise cloud option could also see positive outcomes.

CoreWeave, Snowflake, and Datadog are expected to gain from the increased demand for data infrastructure for AI, with monitoring and observing AI systems becoming increasingly essential in the future. Considering the historical performance of the broader stock market following US midterm elections, the combination of a possible Republican setback, divided government, and continued AI spending could create an advantageous setup for these prominent technology stocks.