Shares of AI infrastructure and memory providers tumbled on Wednesday even as broader U.S. equity indexes rallied, after Democratic midterm victories fueled fears that data center expansion could face tougher regulation and permitting delays.
Neocloud operators CoreWeave fell as much as 6% in premarket trading, while IREN dropped 5.8% and Nebius lost 4.15%. Memory chip stocks were hit harder: Micron Technology declined more than 6.7%, SK Hynix nearly 5.4%, and SanDisk more than 8%. The declines contrasted with a broad rally, with the S&P 500 up 1.8%, the Dow Jones Industrial Average up more than 2%, and the Nasdaq Composite gaining 2.5%.
Investors focused on the Texas gubernatorial result, where Democrat Gina Hinojosa defeated incumbent Governor Greg Abbott after campaigning for an immediate moratorium on new data centers. Texas accounts for roughly 27% of planned U.S. data center capacity, according to Wells Fargo. Goldman Sachs economists warned that Democratic wins at state and local level could lead to short-term data center moratoria, potentially affecting about 45% of planned U.S. data center capacity expansion.
Dan Ives of Yorkville Ives & Co. called the Texas result the "biggest worry" of the night for technology investors and the AI trade. Nick Ferres of Vantage Point Asset Management said Democrats will likely push for greater regulation, adding that financing and return on investment risks have become more challenging. Evercore ISI analysts said a more restrictive data center development environment could create incrementally more negative sentiment for AI infrastructure-exposed names.
StoneX's Cody Acree described the decline as a valuation "reset" rather than evidence that 2027 data center demand had suddenly weakened, but warned that continued policy uncertainty could challenge chip stocks priced for years of uninterrupted growth. The memory selloff also reflected concerns about emerging competition from China's CXMT, which plans to sample server-grade DRAM using 4F² architecture by the end of the year.
