Data center restrictions draw scrutiny
Democratic gains in governors' races put the outlook for data center construction at the center of investors' concerns. CNN identified the party's victory in Texas as a key driver of the selling. The state is a major hub for planned AI data centers, with large investments from Google, Meta, Oracle and OpenAI.
Texas Governor-elect Gina Hinojosa had campaigned on temporarily halting data center development and removing certain tax incentives for businesses building those facilities in the state. At the national level, Vermont Sen. Bernie Sanders, who caucuses with Democrats, had called for a data center moratorium as of Nov. 5, according to InvestmentNews.
"The big election outcome was, especially with the Democrats winning a lot of the governorships, that the slowdown of the data center buildout is the real key theme that's going to stick," said Michael O'Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
Restrictions were already increasing before the election. Citi Research figures shared by The Information and cited by Benzinga put the number of U.S. data center bans and pauses at nearly zero through mid-2025, roughly 20 that December, more than 300 in June 2026 and over 500 by October.
Potential construction pauses could put about 30% of the U.S. data center capacity additions expected in 2028 at risk, UBS analysts estimated, according to Reuters reporting cited by Benzinga.
Chipmakers and neocloud firms lead the losses
Thursday brought a second consecutive day of losses in AI stocks. For the Nasdaq Composite, it was the steepest one-day fall since the April 2025 "Liberation Day" sell-off and the fifth drop exceeding 500 points since mid-October. The index stood nearly 12% below its Oct. 6 record close, beyond the 10% decline from a recent peak that defines a correction.
Chipmakers and neocloud companies suffered the largest declines as investors worried about delays to data center projects worth billions of dollars. The Philadelphia SE Semiconductor index sank 12%, reaching its lowest point in more than six months. Nvidia fell 9%, while Advanced Micro lost 17%.
CoreWeave dropped roughly 10% and Nebius about 15%, CNN reported. Those losses left CoreWeave 76% below its June 2025 peak, reached shortly after its IPO, and Nebius 58% below its June 2026 peak.
Analysts and portfolio managers pointed to both the stocks' earlier gains and growing financing difficulties to explain why the retreat in semiconductors and AI infrastructure was not entirely unexpected. Higher U.S. interest rates since late summer and tighter financial conditions had already constrained smaller firms' ability to raise money, with financing concerns hanging over CoreWeave and Nebius.
The losses extended beyond AI shares. According to CNN, the Nasdaq 100 declined 6.36%, its worst session since the onset of the COVID-19 pandemic in March 2020. The Dow Jones Industrial Average shed 1,833 points, more than reversing its 1,569-point post-election gain the previous day. Both the Dow and the S&P 500 recorded their worst day since April 2025.
Volatility jumps as selling reaches Asia
The VIX, which measures expectations for market price swings, recorded its largest increase since December 2024. CNN put Thursday's jump at roughly 70% and reported that the index reached a seven-month high. Investors also sought safety in Treasuries, sending the 10-year U.S. yield down to 4.84%, its lowest level in two months, according to CNN.
Many analysts expected the scale of the U.S. losses to bring more selling, beginning with Friday's Asian sessions. Japan's Nikkei and South Korea's Kospi had each gained more than 20% this year, but both had already fallen sharply after Wednesday's rout in data center shares.
At the market open on Friday, Nov. 6, the Kospi plunged almost 9%, triggering a 20-minute trading halt on the exchange, CNN reported.
