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Major Market event Thu, Nov 5 2 min read
The US technology-stock selloff deepened on November 5 as investors worried that Democrats' sweeping midterm gains could slow data-center construction. Data centers house the computers that run AI and other services; concerns about their expansion weighed on both the Nasdaq and S&P 500, with one intraday report putting the Nasdaq's decline at 5.1%.[1][2]
Reports said newly elected Democratic governors in Texas, Georgia and Ohio had promised pauses in data-center construction. The scope and timing of those campaign promises remain to be established, while investors are already pricing in the risk.[3][4]
If construction pauses take effect, developers could defer purchases of chips, servers, storage and networking equipment, pushing suppliers' sales further out. UBS estimates that nearly a third of new US data-center capacity due in 2028 could be delayed if construction pauses spread.[5][6][4]
Project delays could also postpone the computing capacity cloud providers can offer customers and the start of rental income for data-center owners. Texas accounts for about a quarter of US computing capacity scheduled to come online by 2030, making its policy decisions especially consequential; Oracle and former crypto miners becoming AI data-center landlords have also been hit by these concerns.[7][8]
Nvidia, Dell, Micron and other hardware suppliers face the risk of customers deferring orders because equipment demand depends on when facilities are ready. Selling has spread across chip, server, memory and storage stocks as investors mark down growth expectations across the supply chain.[5][9][4]
Oracle and other cloud providers expanding AI capacity may need to revise delivery schedules. If projects slip, their ability to serve customers and earn revenue from that additional capacity moves further out.[7]
Developers with Texas exposure face greater project-timing risk, including businesses shifting from crypto mining to leasing AI facilities. Shares of Applied Digital, Cipher Digital and TeraWulf fell as investors questioned how soon those plans could produce rental income.[8]