By Purvi Agarwal and Johann M Cherian
Nov 4 (Reuters) – Data center stocks slid on Wednesday, while clean-energy shares rallied after Democrats seized control of Congress, prompting investors to reposition for tougher scrutiny of the AI boom and a shift in policy priorities.
The Democratic sweep, which included victories in traditional Republican strongholds and key data-center hubs Texas and Georgia, will usher in divided government in Washington and raises the prospect of greater congressional oversight of industries that benefited from Republican control.
Market reaction rippled across AI-linked stocks, renewables, healthcare companies, defense contractors and prison operators.
DATA CENTER AND UTILITY STOCKS
Data center operators lost ground, with Applied Digital and CoreWeave down 4.1% and 5.3%, respectively. Cipher Digital slid 14.3%.
The data center boom sparked public backlash this year, raising concerns that tighter Democratic oversight could slow investment just as investors grow wary of soaring AI spending and uncertain returns.
Though analysts doubt any legislation could meaningfully stall data center construction, a Democratic-led Congress increases prospects of more hearings and investigations related to the AI buildout.
“AI has been an enormous engine powering the US economy, so any curbs on its future development could threaten to put the brakes on growth,” said Kit Rees, investment strategist at Quilter.
Utilities and equipment suppliers exposed to the data-center boom also came under pressure. GE Vernova fell 5.8%, while Constellation Energy and Vistra, among the power companies most exposed to data-center projects in Texas, slid 5% and 9%, respectively.
CLEAN ENERGY
A Democratic sweep could bolster expectations for continued federal support for clean energy while speeding approvals for energy and infrastructure projects.
Democrats plan to scrutinize the Trump administration’s efforts to roll back emissions rules and could use the Congressional Review Act to overturn regulations that make it easier to sell gas-powered trucks and SUVs.
Shares of solar maker First Solar gained 13.8%, residential solar installer Sunrun added 12.5% and inverter maker Enphase Energy was up 10.2%. Clean-power developer NextEra Energy inched 3.7% higher.
“The more that oil and gas prices rise, the bigger the incentive, the bigger the economic incentive to roll out clean energy,” said Paul Jackson, global market strategist for EMEA at Invesco.
Europe’s Vestas and Orsted rose 2.9% and 4.7%, respectively, while Portugal’s EDP Renewables was up 2.3%.