AI, data-center stocks slip as Democratic sweep clouds expansion plans

AI and data center-linked stocks slipped ​in premarket trading on ​Thursday as Democrats' sweeping US ‌midterm victory ​raised 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 down 1.6% and 2.2%, respectively.

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% 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 buildout ⁠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. Data-center operators Applied Digital and Cipher Digital fell ⁠about ​1% each, while IREN dropped 1.5%.

The weakness extended to utilities and equipment suppliers exposed to the buildout. GE Vernova fell 1.2%, while Constellation ⁠Energy slipped 0.7%. Hyperscalers were mixed, with Amazon.com up nearly 1% and Microsoft ⁠flat. Chipmakers ⁠Nvidia, Intel and Broadcom fell between 0.4% and 1.5%.

Separately, Qualcomm plunged 10.2% after quarterly smartphone-chip sales missed Wall ‌Street estimates.