AI stocks fall as projected Texas governor result raises data-center risks

Gina Hinojosa’s support for an AI data-center moratorium became a market concern before any new restriction was announced. AI-linked stocks fell overnight into November 4 as the Democrat was projected to defeat Texas Governor Greg Abbott. CNBC linked the selling to fears that tougher development limits could disrupt a major center of the AI infrastructure buildout.

The sharpest losses hit data-center companies

Nasdaq-100 futures fell 0.8% as election results came in, more than twice the decline in Dow futures. The Technology Select Sector SPDR ETF, which trades under XLK, was down 2% on Robinhood. Those readings captured an overnight reaction, rather than the outcome of a completed regular trading session.

• CoreWeave fell 7% on Robinhood. The company uses borrowed money to build data centers.
• Nebius Group, another AI cloud provider, declined 4% on the platform.
• Oracle also lost 4% in Robinhood’s overnight trading.

Markets had already anticipated Democrats winning the House of Representatives and possibly taking the Senate, CNBC reported. Texas stood out as the result that appeared to unsettle technology investors most. The Associated Press projected Hinojosa as the winner over Abbott; her campaign had called for tougher limits on data-center development.

27%Planned U.S. data-center power capacity in Texas

Wells Fargo estimates that Texas accounts for 27% of planned U.S. data-center gigawatts. This measures planned power capacity, not the number of facilities.

A construction question, not just an election surprise

That concentration explains why a state election could become a concern for the national AI trade.

Scott Ladner, chief investment officer at Horizon Investments, identified that risk earlier Tuesday as results arrived. He said an Abbott defeat could move markets because it would raise a basic question: where companies could build their data centers. His assessment cast Texas as an important construction location whose availability investors could no longer take for granted.

Wells Fargo chief equity strategist Ohsung Kwon had likewise warned this week that a Democratic victory in Texas could be a “left-tail event” for the AI trade—a risk of an unusually severe downside outcome. That was a forecast about investor exposure, not a finding that projects had already been stopped by the election result.

The AI trade was already under pressure

The election reaction followed an October retreat. The Nasdaq-100 had entered correction territory by month-end as investors worried that growth in data-center spending was slowing. Those concerns covered large cloud companies as well as private AI developers OpenAI and Anthropic. The Texas result added a potential development constraint to an already unsettled investment outlook.

Optimal Advisory’s Washington policy team argued this week that the political appeal of data centers had shifted. Once promoted as economic development tools, projects had become unpopular during the midterm campaigns, the team wrote. Its expectation was that the elections would encourage state and local officials to block projects, delay them or raise their costs.