AI stocks fall after Democrats win Texas governor race

Key Points:

• Artificial intelligence stocks declined following Democratic victories in the midterm elections, notably with Democrat Gina Hinojosa projected to win the Texas gubernatorial race, raising concerns about potential data center moratoriums in a key tech hub.
• The Nasdaq-100 futures dropped 0.8%, while the State Street Technology Select Sector SPDR ETF (XLK) fell 2% on Robinhood, with high-risk cloud companies like CoreWeave and Nebius Group experiencing even larger losses.
• Texas is a crucial state for data center development, and a Democratic win there is seen as a significant threat to the AI sector's growth, as it could limit data center construction, impacting the broader AI trade negatively.
• Democrats also appeared poised to win governorships in other important data center states such as Georgia, Pennsylvania, and Ohio, further increasing regulatory and political risks for data center expansion.
• Analysts warn that the midterm election results, especially the Texas outcome, could trigger a substantial downturn in tech and AI-related stocks, reflecting growing political resistance to data center projects at the state and local levels.