AI and data center stocks decline as Democrats’ sweeping victory casts doubt on expansion plans

Reuters, November 5 - In pre-market trading on Thursday, stocks related to artificial intelligence and data centers fell, as the Democratic Party achieved a landslide victory in the U.S. midterm elections (link), raising concerns in the market that the rapid expansion of the industry may face obstacles.

Serving as a barometer of investor concerns over massive AI spending, shares related to Neocloud fell, with CoreWeave CRWV.O and Nebius NBIS.O down 1.6% and 2.2%, respectively.

Investors are worried that Democratic control of Congress may subject the data center industry to stricter scrutiny, at a time when public opposition to new facilities has already been mounting, potentially further slowing the industry's growth.

UBS analysts estimate that around 30% of the projected new data center capacity in the U.S. for 2028 may be at risk due to potential construction pauses, highlighting the threats facing the industry—which depends on rapid construction of new facilities for growth.

This political uncertainty has added to pressure across the entire AI sector, as investors increasingly question whether the substantial capital expenditure required to build AI infrastructure will yield sufficient returns.

Data center operators Applied Digital (APLD.O) and Cipher Digital (CIFR.O) each saw their stock prices fall about 1%, while IREN (IREN.O) was down 1.5%.

This weak performance also impacted utilities and equipment suppliers affected by these construction projects. GE Vernova (GEV.N) fell 1.2%, and Constellation Energy (CEG.O) edged down 0.7%.

Results were mixed among hyperscale cloud service providers: Amazon AMZN.O rose nearly 1%, while Microsoft MSFT.O was flat. Chipmakers Nvidia NVDA.O, Intel INTC.O, and Broadcom AVGO.O declined between 0.4% and 1.5%.

In addition, Qualcomm QCOM.O shares plummeted 10.2%, as its quarterly (link) smartphone chip sales missed Wall Street's expectations.

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