AMD shares fell after a midterm victory for Democrats set off a sell-off in chip stocks. Investors worry about a clampdown on the AI industry, even though AMD's latest quarterly results were strong.
AMD stock is down 15.1% on Thursday, Nov. 5, as investors dump chipmakers after a midterm victory for Democrats. They worry that a Democratic Congress will clamp down on the AI industry.
State-level data center rules add to the risk
The risk to the data center build-out is greater at the state level, according to the report. New governors in Texas, Ohio, and Georgia campaigned partly on data center moratoriums, and these are key states for AI construction.
If these moratoriums take effect, the AI capex flows that have fueled the extreme growth of AMD and other chipmakers could slow. The iShares Semiconductor ETF is down 7.5% so far today.
The broader market is also under pressure. The S&P 500 and the Nasdaq Composite are down 3.9% and 5.0%, respectively.
Strong earnings meet a timing question
The sell-off follows results rather than a miss. AMD reported Q3 results on Tuesday afternoon, with sales up 45% to $13.4 billion. Data Center revenue nearly doubled.
However, investors are now asking whether the data centers that buy AMD's chips get built as fast as everyone planned. If they do not, the question becomes how AMD keeps growing at the pace investors have come to expect.
Source: The Motley Fool
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