US STOCKS-Nasdaq eyes lower open after midterms-fueled surge as chip, data center stocks fall

The Nasdaq was set for a lower open on Thursday as losses in chip and data center-related stocks weighed, while broader markets were steady after a rally in the last session on the back of Democrats' sweeping midterm election victory. Qualcomm dropped 11.2% in ‌premarket trading after the chipmaker fell short of Wall Street estimates for fourth-quarter smartphone chip sales on sluggish demand and declining Apple-related revenue.

Broader semiconductor stocks extended losses after Wednesday's fall, with Nvidia down 1.5%, Marvell Technology off 4.5% and Intel slipping 2.3%. Chip stocks, along with companies linked to the AI infrastructure buildout, slipped further following the Democrats' election victory including in some key data-center states, ‌where public opposition to the industry's rapid expansion has been growing.

"Tighter data center restrictions on the margin raise the risk to future supply of 'compute', especially in key buildout states ‌like Texas, Georgia and Ohio," BCA Research analysts said. "That raises the value of existing capacity among hyperscalers with more diversified global exposure and resources, supporting their more resilient outlook relative to neoclouds."

Data center operators IREN, Hut 8, and Applied Digital fell over 4% each. Neoclouds CoreWeave and Nebius Group fell 3.9% each. Utilities and equipment suppliers exposed to the data center boom, including GE Vernova and Constellation Energy , were also trading lower. AI server maker ⁠Dell dropped 5.3%.

Most ​large-cap tech stocks meanwhile built on their ⁠gains from the last session as a slower AI buildout was seen as helping them. Amazon.com rose 2.2%, while Meta Platforms and Alphabet were up around 1% each.

Elon Musk-led SpaceX and Tesla were down over 2% each, extending ⁠losses. Musk spent nearly half a billion dollars backing Republican candidates, including efforts to keep them in control in Texas, the home state of both companies. At 8:24 a.m. ET, Dow E-minis were up ​327 points, or 0.61%, and S&P 500 E-minis were up 7.75 points, or 0.1%. Nasdaq 100 E-minis were down 222.25 points, or 0.78%.

The S&P 500 clocked its ⁠biggest one-day percentage gain in three months on Wednesday as the easing political uncertainty boosted risk appetite. Some analysts said that a divided government in Washington could lead to fewer sharp legislative changes and may even make it harder to ⁠agree ​on fiscal spending, given the US's deteriorating fiscal picture.

A sharp drop in oil prices in the previous session had also supported the sentiment. Brent crude futures were up over 2.8% on Thursday after dropping more than 8% on Wednesday. Crude oil prices have been in focus this year as concerns about supply disruptions from the Middle East conflict ⁠have driven sharp swings and stoked inflation worries.

Central banks around the world have acknowledged inflation remains elevated, with the US Federal Reserve even hiking its interest rates in September and ⁠markets pricing in another hike next month. At least ⁠three Fed officials, including Richmond Fed President Thomas Barkin, are slated to speak throughout the day, leading up to a crucial October jobs report due on Friday.

Among other stocks, credit-scoring firm Fair Isaac dropped 10% after missing fourth-quarter profit estimates, while Snapchat owner Snap slid ‌10.2% after missing third-quarter revenue ‌estimates. AppLovin jumped 21.6% after the marketing platform beat third-quarter profit estimates.