Tech stocks plunge on Democrat midterm win

U.S. tech stocks sold off sharply on Thursday after Democrats secured a decisive victory in the midterm elections. Investors feared the political shift would create obstacles for the rapid expansion of artificial intelligence infrastructure. The market reaction signaled deep uncertainty about the future of massive AI buildout plans.

The decline hit major hardware makers the hardest. Nvidia shares dropped by 9.3 percent, while AMD fell 17.3 percent. Micron lost 17.5 percent of its value, and Broadcom declined 10.4 percent. Other major players saw steep losses, with Tesla down 10.8 percent, Microsoft down 3.6 percent, and SpaceX down 9.1 percent.

Companies providing computing power through large data centers, known as neoclouds, also suffered heavy losses. Nebius shares fell by 15 percent, and Iren dropped 17 percent. CoreWeave declined by 10 percent. The sell-off extended to European tech markets, affecting companies across both regions.

Kyle Rodda, a senior financial market analyst at Capital.com, noted that the initial drop continued as investors assessed the implications of a Democrat controlled Congress. He pointed out that regulatory risks emerged just as the AI investment landscape showed signs of instability. Earnings from major tech firms had recently missed growth expectations, leading to warnings about slowing AI spending.

Local opposition to new infrastructure has accelerated this trend. Dozens of ballot measures in 10 states voted on Tuesday aimed to restrict data center construction. The International Data Center Authority reported that at least 46 AI data center projects across 20 states were blocked or stalled between January 2024 and May 2026. These projects represented more than $170 billion in announced investment.

Dan Ives, a partner at Yorkville Ives & Co., predicted the election results would slow the pace of 800 to 1,000 data centers currently planned for the United States. He argued that Democratic control of the Senate would create hurdles for the sector over the next two years. Ives suggested that Big Tech capital expenditure growth may peak in 2027, which is earlier than previously anticipated.

Goldman Sachs estimates AI related capital spending could reach approximately $7.6 trillion from 2026 through 2031. The sector faced headwinds before the election, with chipmakers selling off in October due to rising interest rates. Many large technology companies now report negative cash flow as they invest hundreds of billions in AI infrastructure. Dominique Toublan, head of U.S. credit strategy at Barclays Investment Bank, described the current situation as a shift from a competitive race to a war of attrition.

Toublan noted that AI pushback is bipartisan but local, making the buildout more expensive rather than halting it entirely. Scarce power resources are expected to favor companies with the largest balance sheets. The Democratic sweep of Congress also has implications for the cryptocurrency industry, potentially delaying industry friendly legislation such as the Clarity Act.