AI, data-center stocks slump as Democratic sweep clouds expansion plans
FILE PHOTO: File Photo: A view of a field with a sigh against the construction of a data center, during the US midterm elections on Election Day, in Leavenworth County, Kansas, US, November 3, 2026. REUTERS/Nathan Howard/File Photo/File Photo
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Nov 5 : AI and data center-linked stocks tumbled on Thursday as Democrats’ sweeping US midterm victory fueled concerns about potential hurdles to the industry’s rapid expansion.
Neocloud stocks, which have become a barometer of investor anxiety over heavy AI spending, fell, with CoreWeave and Nebius slumping 11 per cent and 15 per cent, respectively.
Chipmakers also slid. The Philadelphia SE Semiconductor index dropped 8 per cent, touching its lowest in more than six months, dragged down by losses in heavyweights Nvidia and Broadcom.
The sharp losses put the tech-heavy Nasdaq on course to confirm a correction, or a 10 per cent drop from its recent peak.
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Investors worry Democratic control of Congress could bring tougher scrutiny of the data-center industry, potentially slowing development at a time when public opposition to new facilities is already mounting.
Around 30 per cent of expected US data center capacity additions in 2028 could be at risk from potential construction pauses, UBS analysts estimated, highlighting the threat to an industry whose growth depends on a rapid build out of new facilities.
The political uncertainty adds to pressure on the broader AI trade, as investors increasingly question whether the enormous capital spending required to build AI infrastructure will generate sufficient returns.
“The market’s moving from the promise of AI to the price of AI,” said Ted Parkhill, founder and CEO of Incline Investment Management.
“There’s no question that AI is going to be transformative for the world in the long run. But that doesn’t mean every AI-related stock is currently priced appropriately. There’s going to be a lot of turmoil.”
Data-center operators Applied Digital, Cipher Digital and IREN tumbled more than 15 per cent.
The weakness extended to utilities and equipment suppliers exposed to the buildout. GE Vernova fell 7 per cent, while Constellation Energy slipped 4.3 per cent.
Hyperscalers, which defied the selloff on Wednesday on bets that slower data-center construction could rein in Big Tech’s AI spending, also dropped.
Amazon.com fell 3.3 per cent and Alphabet shed 1.5 per cent.
Separately, Qualcomm plunged 9 per cent after quarterly smartphone-chip sales missed Wall Street estimates.
Source: Reuters
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