Texas Election Pressures AI-Linked Stocks

Several AI-linked stocks fell after Democrats won both houses of Congress and Gina Hinojosa won Texas’s governor race on November 3. Hinojosa campaigned for tougher limits on data center development and wants an immediate moratorium in Texas. Investors are weighing whether state restrictions could delay projects in major data center markets. Wells Fargo estimates that 27% of planned U.S. data center gigawatts are in Texas.

Dan Ives of Yorkville Ives & Co. said in a Wednesday morning note that the midterms would slow data center construction across the United States. He said Democratic control, especially of the Senate, would create “major hurdles” for AI and technology legislation in Washington over the next 2 years. Ives called Texas the election night’s biggest concern for technology investors and the AI trade, saying around 25%-30% of data center gigawatts and capacity would come from the state.

SpaceX shares fell 4% after the market opened and Tesla shares fell 5%. Elon Musk had spent at least $474 million on the midterms, including $224 million in Texas, where Republican candidates Ken Paxton and Greg Abbott lost. SpaceX is building multiple gigawatts of data center capacity, including projects in Texas. Musk posted on X that “Data centers in space” looked appealing, referring to his speculative plans for off-planet AI infrastructure.

Neocloud companies CoreWeave and Iren fell 4% in morning trading; Nebius Group fell about 0.5%, Oracle rose 2%, and Nvidia edged lower. Alphabet rose 3%, Amazon 7%, Meta 2% and Microsoft 5.5%. The Texas result added pressure to the AI trade as the Nasdaq-100 had ended October in correction territory amid concerns that data center spending by hyperscalers and private AI companies OpenAI and Anthropic was slowing.

Democrats also won or retained governorships in Georgia, Pennsylvania and Ohio. Wells Fargo estimates Georgia accounts for 7% of planned U.S. data center gigawatts, while Ohio and Pennsylvania each account for 5%. Earlier this year, Bank of America strategist Michael Hartnett warned that Democrats winning the Senate and Texas governorship could lead to a stock slump of more than 10% into year-end. Optimal Advisory’s Washington policy team wrote this week that the elections could encourage local and state officials to block, delay or raise the cost of data centers.

Several AI-linked stocks fell after Democrats won both houses of Congress and Gina Hinojosa won Texas’s governor race on November 3. Hinojosa campaigned for tougher limits on data center development and wants an immediate moratorium in Texas. Investors are weighing whether state restrictions could delay projects in major data center markets. Wells Fargo estimates that 27% of planned U.S. data center gigawatts are in Texas.

Dan Ives of Yorkville Ives & Co. said in a Wednesday morning note that the midterms would slow data center construction across the United States. He said Democratic control, especially of the Senate, would create “major hurdles” for AI and technology legislation in Washington over the next 2 years. Ives called Texas the election night’s biggest concern for technology investors and the AI trade, saying around 25%-30% of data center gigawatts and capacity would come from the state.

SpaceX shares fell 4% after the market opened and Tesla shares fell 5%. Elon Musk had spent at least $474 million on the midterms, including $224 million in Texas, where Republican candidates Ken Paxton and Greg Abbott lost. SpaceX is building multiple gigawatts of data center capacity, including projects in Texas. Musk posted on X that “Data centers in space” looked appealing, referring to his speculative plans for off-planet AI infrastructure.

Neocloud companies CoreWeave and Iren fell 4% in morning trading; Nebius Group fell about 0.5%, Oracle rose 2%, and Nvidia edged lower. Alphabet rose 3%, Amazon 7%, Meta 2% and Microsoft 5.5%. The Texas result added pressure to the AI trade as the Nasdaq-100 had ended October in correction territory amid concerns that data center spending by hyperscalers and private AI companies OpenAI and Anthropic was slowing.

Democrats also won or retained governorships in Georgia, Pennsylvania and Ohio. Wells Fargo estimates Georgia accounts for 7% of planned U.S. data center gigawatts, while Ohio and Pennsylvania each account for 5%. Earlier this year, Bank of America strategist Michael Hartnett warned that Democrats winning the Senate and Texas governorship could lead to a stock slump of more than 10% into year-end. Optimal Advisory’s Washington policy team wrote this week that the elections could encourage local and state officials to block, delay or raise the cost of data centers.