AI Data Center Selloff Shows Investors’ Election Fears
AI and semiconductor stocks fell on Thursday as investors weighed whether the U.S. midterm results could slow data center construction. The selloff hit chipmakers and companies that build data centers, amid existing concerns about spending, interest rates and returns. By Friday morning, U.S. tech stocks showed signs of recovery, while the election’s potential effect on AI infrastructure plans remained a concern for investors.
AI and semiconductor stocks fell on Thursday as investors reconsidered U.S. data center plans after Democrats won control of Congress. The selloff shows how political risk has collided with existing concerns about AI spending, interest rates and returns.
By Friday morning, U.S. tech stocks were showing signs of recovery. The sharp reversal came after a Thursday rout that hit chipmakers, software companies and firms building data centers, as investors assessed whether election results could slow the AI infrastructure boom.
What did the selloff reveal about data center risk?
The market reaction showed that investors were watching more than demand for AI services. They were also weighing whether political and regulatory opposition could delay or shrink the data center projects that underpin the industry’s expansion.
Voters approved candidates and ballot measures that sought to curb data center construction, while investors also faced concerns about high interest rates, heavy capital spending and the uncertain returns on AI investments. Those pressures were already weighing on the trade before the election results arrived.
The consequences reached beyond data center operators. Chipmakers and companies supplying infrastructure also came under pressure, linking local disputes about construction to the wider technology market. For workers and businesses following the sector, that means debates over where facilities can be built may affect investor expectations across the AI supply chain.
Why were chipmakers and data center firms hit?
Semiconductor companies were among the hardest-hit stocks as investors reconsidered the pace of infrastructure investment. Nvidia lost 9.3%, while AMD fell 17.3%, Micron dropped 17.5% and Broadcom declined 10.4% on Thursday.
Companies known as neoclouds also suffered. They provide AI computing capacity and are involved in large data center projects. Nebius fell 15%, Iren dropped 17% and CoreWeave declined 10% that day.
Kyle Rodda, senior financial market analyst at Capital.com, wrote that investors were considering what a Democrat-controlled Congress could mean for tech regulation and the AI boom. He said the sector’s regulatory and political risks were emerging while the AI trade already faced questions about its foundations.
Corporate spending added another concern. Rodda described earnings season as an “overall disappointment” and said results from the Magnificent Seven had fallen short of growth expectations, with warning signs that AI spending was slowing.
How much construction could face delays?
Dan Ives, partner at Yorkville Ives & Co., said the election could slow plans for 800 to 1,000 data centers across the United States. In a separate estimate cited in his investor note, at least 10% of planned AI-focused projects could be removed from the roadmap, while up to 20% could face a longer regulatory process.
Local opposition was already affecting projects before the midterms. Research by the International Data Center Authority found that at least 46 AI data center projects across 20 U.S. states, representing more than $170 billion in announced investment, were blocked, withdrawn or stalled following community opposition between January 2024 and May 2026.
The figures underscore why permitting and community resistance matter to companies and investors. Delays can complicate plans to expand computing capacity, while uncertainty about construction can weigh on the firms supplying chips and other infrastructure. Ives said he expects technology-industry capital spending growth to peak next year, earlier than his previous expectation of 2028 or 2029.
What does the spending outlook show?
The scale of planned investment remains substantial. Goldman Sachs estimates AI-related capital spending could total about $7.6 trillion from 2026 through 2031, across computing, data centers and power.
Ives wrote that spending by big technology companies and hyperscalers should still exceed $1 trillion in 2027, while growth into 2028 would moderate as data center construction slowed. The projected spending includes equipment as well as the land, energy and construction needed to build facilities.
The political map has particular importance for those plans. Ives pointed to Texas as a state where the changing environment could affect the pace of construction. Local restrictions and longer approval processes can alter where companies place infrastructure, even as they continue to invest in AI.
Investors now have to weigh that construction risk alongside questions about returns and financing. The Friday morning recovery suggested the Thursday losses were not the only market signal, but the selloff exposed how quickly election outcomes can reshape expectations for a sector built on large infrastructure commitments.
At least 46 AI data center projects across 20 U.S. states had already been blocked, withdrawn or stalled following community opposition by May 2026.
This article is for general information only and is not financial advice.
