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Democrats’ stunning defeat of Republicans in this week’s midterm elections was not only a scathing rebuke of President Donald Trump, but also a potential roadblock to his massive plan to build artificial intelligence data centers across the country.
Tech and AI stocks have been reeling from market volatility since the landmark results.
The most valuable tech companies in the United States and Europe suffered massive declines on Thursday as investors became nervous.
Nvidia We lost 9.3%. AMD Dropout rate 17.3%, microsoft 3.6%, micron 17.5%, broadcom 10.4%, tesla 10.8% space x 9.1%.
Neocloud, which relies on its ability to provide AI computing power and is involved in large data center projects, was also particularly hard hit. Nevius fell 15%, Airen fell 17%, coreweave Thursday is 10%.
By Friday morning, U.S. tech stocks were showing signs of recovery, but the market’s sharp rally warns that the U.S. AI boom could have a rockier road ahead.
“The selloff in tech stocks that took hold in the aftermath of the U.S. midterm elections has resumed as investors ponder what a Democratic-led Congress will mean for tech regulation and the AI boom overall,” Kyle Rodda, senior financial markets analyst at Capital.com, wrote in a note Thursday after the bell.
AI hurdles and moratoriums
Dozens of local bills that would impose restrictions on data center construction in various ways were on the ballot in 10 states on Tuesday, CNBC reported Wednesday.
“The regulatory and political risks come at a time when the proverbial foundations of AI trading were already shaky,” Rodda said.
He added that earnings season had been an “overall disappointment” for the market, adding that the Magnificent Seven’s performance to date “has fallen short of growth expectations and there are flashing warning signs that the pace of AI spending is slowing.”
Now, Rodda wrote, there is a risk of further slowing the investment boom, where “potentially disruptive measures such as a moratorium on new data center construction have sent investors rushing to exit so-called AI trading.”
Opposition to data centers in the United States is a long-standing issue.
A study conducted by think tank International Data Center Authority (IDCA) found that between January 2024 and May 2026, at least 46 AI data center projects in 20 U.S. states representing more than $170 billion in announced investments were blocked, withdrawn, or stalled due to community opposition.
Dan Ives, a partner at Yorkville Ives & Company, said in a note Wednesday morning that the midterm elections will weigh on investors’ minds.
“A big focus for tech investors is whether these midterm elections will slow the pace of the 800 to 1,000 data centers planned across the United States that will fuel the AI revolution…In our view, the answer is a clear yes,” he wrote.
Ives added that there will be some major hurdles for AI over the next two years, especially if Democrats take control of the Senate.
unstable AI
The numbers floating around about the size of projected AI infrastructure spending are eye-opening.
Goldman Sachs estimates that AI-related capital spending could total about $7.6 trillion from 2026 to 2031, including computing, data centers, and power.
But heading into the election, AI stocks were already looking volatile on Wall Street.
Chipmakers, NeoCloud and other data center companies sold off in October on concerns about rising interest rates and overspending. Many hyperscalers spend hundreds of billions of dollars on AI infrastructure and end up with negative cash flow.
“The AI backlash is bipartisan but localized, and ramp-up is becoming more expensive rather than stagnant,” Dominique Toubran, head of U.S. credit strategy at Barclays Investment Bank, said in a note Wednesday.
“The AI race moves from a prisoner’s dilemma to a war of attrition, as the scarcity of power favors the largest balance sheets.”
By Thursday morning, after speaking to investors over the past 24 hours, Ives said it had been a tumultuous time for Wall Street technology backers trying to “discern the Belt and Road poker game and how this really impacts building the AI revolution.”
The effects can be significant.
“Taking all factors together, we now believe that Big Tech’s capex growth rate will peak in 2027, whereas previous projections thought it would not occur until 2028-2029,” he said.
News editing
One more thing
The Capitol building is photographed in Washington on November 4, 2026, the day after the midterm elections in which Democrats secured majorities in both houses of Congress, changing the balance of power in Congress during the final two years of President Donald Trump’s term.
Mehmet Ethel | Anadolu | Getty Images
Elsewhere in the mid-term region, data centers aren’t the only thing in the crosshairs.
A Democratic sweep of Congress is likely to reset the political calculus on cryptocurrencies, writes my colleague Tanaya Machel.
result? That could lead to a more adversarial approach in Washington and push back industry-friendly legislation like the Transparency Act, she says.
