AI stocks fall as Democrats win Texas governor race on data center fears

AI stocks fell in overnight trading after Democrats won big in the US midterm elections, including a projected win for Democrat Gina Hinojosa over Republican Governor Greg Abbott in Texas, according to CNBC. Nasdaq-100 futures were down 0.8%, and the State Street Technology Select Sector SPDR ETF fell 2% on Robinhood.

Companies most exposed to data center construction fell further. CoreWeave dropped 7% on Robinhood, Nebius Group fell 4% and SpaceX, which is headquartered in Texas, lost 6%. Oracle Corporation declined 4%.

Hinojosa has supported a moratorium on AI data centers. Wells Fargo estimates that Texas holds 27% of planned US data center capacity in gigawatts, and its chief equity strategist Ohsung Kwon had warned that a Democratic win there could be a "left-tail event" for the AI trade. Democrats were also projected to win or keep the governorships in Georgia, Pennsylvania and Ohio, which together account for about 17% of planned capacity, according to Wells Fargo.

Washington policy firm Optimal Advisory wrote that the results are likely to show local and state officials that there is "a political upside to blocking, delaying and/or raising the cost of data centers."