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AI stocks slide as Texas governor result raises data center risks
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- DeepHorus
AI stocks slid in overnight trading after Democrats won midterm victories, including the Texas governor race, raising fears of data center moratoriums in a key tech hub. Nasdaq-100 futures fell 0.8%, more than double the decline in Dow futures. The Technology Select Sector SPDR ETF dropped 2% on Robinhood.
Democrat Gina Hinojosa was projected to defeat incumbent Republican Gov. Greg Abbott in Texas, the Associated Press reported. Hinojosa has supported a moratorium on AI data centers. Texas holds 27% of planned U.S. data center gigawatts, according to Wells Fargo.
Direct AI infrastructure plays posted larger losses. CoreWeave, a high-risk neocloud that borrows to build data centers, fell 7%. Nebius Group dropped 4%, Oracle lost 4%, and SpaceX, Musk's Texas-headquartered AI data play, slid 6%.
Markets had expected Democratic House gains and possible Senate control, but the Texas governorship was seen as the biggest blow. Scott Ladner of Horizon Investments said an Abbott loss raised a legitimate question about where to build data centers. He called Texas fertile ground that could become largely barren.
Democratic wins or retained governorships in Georgia, Pennsylvania and Ohio added pressure. Wells Fargo estimates Georgia represents 7% of planned U.S. data center gigawatts; Ohio and Pennsylvania each account for 5%. The Nasdaq-100 ended October in correction territory amid slowing data center spending concerns.
Wells Fargo strategist Ohsung Kwon warned a Democratic Texas win could be a "left-tail event" for the AI trade. Bank of America's Michael Hartnett earlier warned of a stock slump exceeding 10% into year-end if Democrats won the Senate and Texas governorship. The results intensify pressure on the AI-led bull market as investors reassess buildout risks.
