AI stocks hammered by midterm shock

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The Democrats’ stunning rout of the Republicans during the midterms this week wasn’t just a stinging rebuke of President Donald Trump, but also a potential roadblock to huge plans to build artificial intelligence data centers across the country. 

Since the landmark results came in, tech and AI stocks have been jolted by market volatility.

The most valuable tech companies in the U.S. and Europe were hit with a massive sell-off on Thursday as investors got nervous. 

Nvidia lost 9.3%, with AMD shedding 17.3%, Microsoft 3.6%, Micron 17.5%, Broadcom 10.4%, Tesla 10.8% and SpaceX 9.1%.

Neoclouds, which rely on their ability to serve AI computing power and are involved in massive data center projects, were also hit particularly hard. Nebius dropped 15%, Iren fell 17% and CoreWeave 10% on Thursday.

By Friday morning, U.S. tech stocks were showing signs of recovery, but the market blip is a warning of potentially rougher roads ahead for the AI boom in America.

“The tumble in tech stocks that took hold in the immediate aftermath of the US midterm elections resumed as investors contemplated what a Democrat-controlled Congress may mean for tech regulation and the overall AI boom,” wrote Kyle Rodda, senior financial market analyst at Capital.com in a note on Thursday after the bell.

There were dozens of local ballot measures in 10 states up for a vote on Tuesday that would place restrictions on the construction of data centers in different ways, CNBC reported on Wednesday.

“The regulatory and political risks arise at a time when the proverbial AI trade was already on shakier foundations,” said Rodda. 

Earnings season had been an “overall disappointment” for the markets, he added, with Magnificent Seven results so far “undershooting growth expectations and flashing warning signs that the pace of AI spending is slowing down.” 

Now, Rodda wrote, the risk that the investment boom could be slowed further “by measures as potentially disruptive as moratoriums on new data center construction, investors are rushing to the exits on so-called AI trades.”

Opposition to data centers in the U.S. is a long-standing issue. 

Between January 2024 and May 2026, 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data center projects across 20 U.S. states, representing more than $170 billion in announced investment, were blocked, withdrawn or stalled following community opposition, according to research carried out by think tank International Data Center Authority, or IDCA.

The midterms will weigh on investors’ minds, Dan Ives, partner at Yorkville Ives & Co., said in a note on Wednesday morning.

“For tech investors the big focus is will these mid-term elections slow the pace of the planned 800 to 1,000 datacenters across the US fueling the AI Revolution…the answer in our view is a clear YES,” he wrote.

Democrats taking control, particularly over the Senate, will create some major hurdles…