Chip stocks fell on Wednesday after Democrats won both chambers of Congress and key governors' races on pledges of tougher rules for data-center construction. StoneX's Cody Acree expects little near-term damage to the AI buildout, while D.A. Davidson's Gil Luria sees higher costs ahead.
Chip stocks slipped on Wednesday as investors weighed what the election means for data-center growth. A blue wave swept both chambers of Congress, and Democrats won key governors' races by pledging tougher tacks on data-center construction.
Wall Street's forecasts depend heavily on new data-center capacity coming online, so the political shift matters for chip and infrastructure names.
Chipmakers drop in morning trading
Intel and Sandisk were off more than 2% in morning action, while Marvell was off more than 5%. Micron Technology shares were down about 2%.
Nvidia's stock was down fractionally, as was the PHLX Semiconductor Index.
Analyst: funded projects stay on track
StoneX's Cody Acree told MarketWatch he doubts the election outcomes will hinder data-center buildouts in the near term. He said the election raises the risk of tougher permitting, power and water restrictions, and less favorable tax treatment, but "it does not unwind projects already funded, contracted or under construction".
Investors are focused on Texas. Acree calls the state the clear epicenter of the U.S. AI data-center buildout, likely accounting for roughly 30% of national capacity additions through 2028. Democrat Gina Hinojosa won the governor's race after a late surge, and she promised a moratorium until state legislators set new rules on data-center construction.
Acree described Wednesday's move as a reset of tech-sector valuations, not evidence that 2027 data-center demand or build rates have suddenly collapsed.
Luria expects higher costs and a possible slowdown
Bigger issues could emerge over the long term, Acree said, if investors believe policy uncertainty around costs or approvals could limit the AI buildout farther out. Most chip stocks are valued on the assumption of several years of nearly uninterrupted growth, he added.
D.A. Davidson analyst Gil Luria told MarketWatch that data centers will be more expensive to build after the election, and in some states construction may become prohibitively expensive. Data-center decisions usually happen at the local level, he explained, and each municipality can negotiate terms with companies.
Luria said the extra hurdles may slow the U.S. buildout, which could limit the deployment of the chips that go into those data centers.
Source: MarketWatch
Trading involves risk.
Risk Disclaimer
