Power & Sites · United States

AI stocks hammered by midterm shock as data center buildout becomes a 'war of attrition'

Credited to CNBC · cnbc.com · 23h ago

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.

AI hurdles and moratoriums

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data center projects across 20 U.S. states, representing more than $170 billion in announced investment, were blocked, withdrawn or stalled following community opposition, according to research carried out by think tank International Data Center Authority, or IDCA.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 for AI over the next two years, Ives added.

The figures floating around on the scale of projected AI infrastructure spending are eye-watering.

Goldman Sachs estimates that AI-related capital spending could total about $7.6 trillion from 2026 through 2031, across computing, data centers and power.

But, heading into the election, AI stocks were already looking shaky on Wall Street.

Chipmakers, neoclouds and other data center-related companies sold off in October on concerns about rising interest rates and overspending. Many hyperscalers have turned cash flow negative as they spend hundreds of billions of dollars on AI infrastructure.

"AI pushback is bipartisan but local, making the buildout pricier rather than stalling it," said Dominique Toublan, head of U.S. credit strategy at Barclays Investment Bank, in a note from Wednesday.

"The AI race shifts from a prisoner's dilemma to a war of attrition: scarce power favors the biggest balance sheets."

By Thursday morning, after speaking to investors over the past 24 hours, Ives said it was a confusing time for Wall Street tech backers trying to "discern the poker game in the Beltway and how this will truly impact the AI Revolution buildout."

"Putting all the pieces together we believe Big Tech capex growth rate now peaks in 2027 vs our previous view that would not happen until 2028/2029," he said.

Chinese AI lab Moonshot turned to Europe for Nvidia Blackwell access amid U.S. China curbs, sources tell CNBC.

CrowdStrike launches AI kill switch that it says can stop internal agents that go rogue.

Meta seeks to raise up to $25 billion in debt sale as AI spending jumps.

Brookfield plans for a $27 billion AI data center at UK power station.

Elon Musk's Tesla and SpaceX lose over $420 billion in combined market cap after midterms.

Blue Origin pushes launch to January 2027 as it races to rebuild damaged launchpad.

One more thing

Elsewhere in midterm-land, it's not just data centers in the crosshairs.

Democrats' sweep of Congress likely resets the political calculus for crypto, my colleague Tanaya Macheel writes.

The result? It could usher in a more adversarial approach in Washington and push industry-friendly legislation like the Clarity Act to the back burner, she says.

Power & SitesUnited States

BMO Highlights Data Center Stocks as Development Risks Rise

Credited to Investing.com · investing.com17h ago

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Power & Sites · United States

Construction’s latest economic reports reveal less confidence despite more work

Credited to Construction Dive · constructiondive.com · 19h ago

The pessimism stems from high construction costs and slow demand outside the data center boom.

More work on contractors’ books is offering little assurance of stronger returns in the future.

Backlog increased for a second consecutive month in September to 8.7 months, according to Associated Builders and Contractors. Yet, more than a quarter of contractors expected their profit margins to shrink over the next six months, the highest share since November 2025. Sales expectations also dropped to an 11-month low.

The pessimism stems from rising construction costs, coupled with much of the momentum being concentrated in the artificial intelligence buildout.

Construction input prices, for example, jumped 11.2% from a year earlier in September, the largest annual increase in nearly four years, according to ABC. Contractors during that span absorbed much of that cost escalation, according to Associated General Contractors of America.

But on a positive note, signs of activity popped up over the past month in other types of construction too.

Education and healthcare projects pushed nonresidential planning higher in September, according to Dodge Construction Network. Institutional groundbreakings as a whole improved in September as well, according to Dodge.

Nevertheless, data center projects still account for a majority of construction momentum, especially around spending. Construction spending on the data center boom surged 8.6% in September, according to ABC’s analysis of Census Bureau data. Without the data center and closely related power category boost, nonresidential spending fell.

ABC members with data center contractors reported 11.3 months of backlog, three months more than firms without those projects. Just 15% of ABC members had such work under contract.

Read below for Construction Dive’s roundup of the latest economic data.

Education, healthcare projects boosted construction planning in September

Contractors’ backlog jumped in September as profit outlook fell

Iran conflict pushes construction prices to near 4-year high

Commercial groundbreakings plunged 18% in September

Data centers kept nonresidential construction spending positive in September