AI, data-center stocks slip as Democratic sweep clouds expansion plans

Amazon.com

Thu 11:21

Nov 5 (Reuters) - AI and data center-linked stocks slipped in premarket trading on Thursday as Democrats' sweeping US midterm victory raised concerns about potential hurdles to the industry's rapid expansion.
Neocloud stocks, which have become a barometer of investor anxiety over heavy AI spending, fell, with CoreWeave CRWV.O and Nebius NBIS.O down 1.6% and 2.2%, respectively.
Investors worry Democratic control of Congress could bring tougher scrutiny of the data-center industry, potentially slowing development at a time when public opposition to new facilities is already mounting.
Around 30% of expected US data center capacity additions in 2028 could be at risk from potential construction pauses, UBS analysts estimated, highlighting the threat to an industry whose growth depends on a rapid buildout of new facilities.
The political uncertainty adds to pressure on the broader AI trade, as investors increasingly question whether the enormous capital spending required to build AI infrastructure will generate sufficient returns.
Data-center operators Applied Digital APLD.O and Cipher Digital CIFR.O fell about 1% each, while IREN IREN.O dropped 1.5%.
The weakness extended to utilities and equipment suppliers exposed to the buildout. GE Vernova GEV.N fell 1.2%, while Constellation Energy CEG.O slipped 0.7%.
Hyperscalers were mixed, with Amazon.com AMZN.O up nearly 1% and Microsoft MSFT.O flat. Chipmakers Nvidia NVDA.O, Intel INTC.O and Broadcom AVGO.O fell between 0.4% and 1.5%.
Separately, Qualcomm QCOM.O plunged 10.2% after quarterly smartphone-chip sales missed Wall Street estimates.

 (Reporting by Niket Nishant in Bengaluru; Editing by Anil D'Silva)
 ((Niket.Nishant@thomsonreuters.com;))