Artificial intelligence stocks experienced a notable decline following the midterm elections, where Democrats secured a significant victory in Texas, a vital area for tech development. Futures for the Nasdaq-100 fell by 0.8%, while the State Street Technology Select Sector SPDR ETF (XLK) dropped 2%.
Companies directly involved in AI and data centers faced even steeper losses, with CoreWeave down 7% and SpaceX down 6%. The election results indicated a shift in political support that could hinder the expansion of data centers, as Democratic gubernatorial candidate Gina Hinojosa, who advocates for a moratorium on such facilities, was projected to defeat incumbent Republican Greg Abbott.
Analysts, including Scott Ladner from Horizon Investments, expressed concerns that a Democratic win in Texas could stifle the growth of data centers, which are essential for AI operations. Wells Fargo noted that 27% of planned data center gigawatts are in Texas, emphasizing the state's importance in this sector.
The Democratic victories in other states like Georgia, Pennsylvania, and Ohio further compound the uncertainty for data center investments. Overall, the election outcomes may signal a shift in local and state policies that could impede the growth of data centers, leading to a potential downturn in AI-related stocks as investors reassess the landscape