AI Data-Center Stocks Slide, Renewables Rally After Democratic Midterm Sweep
Data-center operators and AI infrastructure stocks fell Wednesday after Democrats swept Congress, while hyperscalers, renewables and healthcare rallied.
AI data-center and infrastructure stocks fell Wednesday, Nov. 4, after Democrats seized both chambers of Congress, prompting repositioning for tougher scrutiny of the AI buildout. Data-center operators slid: Applied Digital 8.8%, CoreWeave (CRWV) 9.5%, Cipher Digital 21%. Utilities dropped too: GE Vernova (GEV) 11.5%, Constellation Energy (CEG) 9.2%, Vistra (VST) 15.4%.
U.S. hyperscalers bucked the selloff. Amazon (AMZN) rose 6.1% and Microsoft (MSFT) 6.7%, putting both on track for their biggest one-day gains since late July, while Alphabet (GOOGL) gained 4.6%. Art Hogan, chief market strategist at B. Riley Wealth, said the hyperscalers already have data centers, so those assets are more valuable now because there will not be an overbuild.
Clean-energy stocks rallied as investors bet Democratic control could bolster federal support for the sector. First Solar rose 8.4%, Sunrun 6.9%, Enphase Energy 8.8% and NextEra Energy 4.6%. Hospital operators and health insurers also gained: HCA Healthcare rose 8.5%, Universal Health Services 6.8%, Centene 7.3% and Molina Healthcare 6.3%.
Stocks tied to Elon Musk fell. SpaceX (SPCX) dropped 3.5% to its lowest since mid-August and Tesla (TSLA) 3.3%, after Musk spent at least $474 million on the midterms, including $224 million in Texas, where Republican Gov. Greg Abbott lost to Democrat Gina Hinojosa, who has campaigned for a moratorium on data centers. Kathleen Brooks, research director at XTB, said the result puts into doubt a potential merger between SpaceX and Tesla, since Congress could slow it down via extra scrutiny. Trump Media fell 13%. Defense stocks also weakened, with Northrop Grumman down 3.7% and RTX, Lockheed Martin and L3Harris down 3% to 6%, as investors reassessed expectations for President Trump's proposed $1.5 trillion budget. Private-prison operators GEO Group and CoreCivic fell 3.8% and 2.1%.
Mark Malek, chief investment officer at Siebert Financial, said "The AI buildout will become more expensive, not disappear." He added that fewer tax incentives and greater responsibility for power and water costs will put pressure on returns. Analysts doubt any legislation could meaningfully stall data-center construction, though a Democratic-led Congress raises prospects of more hearings and investigations. Wells Fargo estimates that 27% of planned U.S. data-center gigawatts sit in Texas, where Democrats also won the governorship, alongside Georgia at 7% and Ohio and Pennsylvania at 5% each.
Dan Ives, partner at Yorkville Ives & Co., said there was "no way to sugarcoat" that Democratic control would create major hurdles for AI and tech legislation over the next two years. The Nasdaq-100 had already fallen into correction territory at the end of October as concerns mounted that growth in data-center spending by hyperscalers and private AI companies was slowing.
Shares were quoted in delayed trading on Nov. 4: CoreWeave (CRWV) at $48.42, down 9.9%; SpaceX (SPCX) at $135.92, down 3.8%; Tesla (TSLA) at $385.19, down 3.3%; Nvidia (NVDA) at $200.13, down 3.2%; Amazon (AMZN) at $266.03, up 6.1%; and Microsoft (MSFT) at $555.80, up 6.7%.