AI data center stocks came under pressure as Democrats — seen as proponents of moratoriums on the buildout — won big in midterm elections and in key technology hubs like Texas.
Markets were already anticipating the Democrats to win the House of Representatives and possibly take Senate control. But the Texas governor mansion going to Democrats was a big blow, analysts said. Democrat Gina Hinojosa, who wants to enact an immediate moratorium on data centers in the state, won over incumbent Republican Gov. Greg Abbott. According to Wells Fargo, 27% of planned data center gigawatts is in the Lone Star State.
The midterm elections will slow the pace of data center buildouts across the U.S., Dan Ives, partner at Yorkville Ives & Co., said in a note on Wednesday morning.
"There is no way to sugarcoat that Democrats taking control especially over the Senate will create some major hurdles for AI and tech legislation in the Beltway over the next 2 years," he said.
He added that the election in Texas was the "biggest worry" of the night for tech investors and the AI trade because that's where around 25%-30% of data center gigawatts and capacity will come from.