Democratic Sweep Hits AI Chip Stocks as Protests Against Data Centers Spread in Europe

Voters, and not only interest rates, are now limiting artificial intelligence (AI) spending. In the US midterms on Nov. 3, Democrats won both chambers of Congress. The Associated Press counted 54 Senate seats and 254 House seats for the party, with some races still uncalled. Two days later, AI and chip shares fell sharply. Nvidia dropped 9.3%, SanDisk lost 20%, Western Digital and AMD each lost 15%, and Micron and Seagate fell about 13%. The Nasdaq Composite fell 5.5% and entered a correction. The largest technology companies together lost about $1 trillion in market value.

The Financial Times summarized the political problem in its headline "Data centres rebuked", with the subhead "Capex, meet the electorate." NBC described the result as a wave of victories by anti-AI candidates. The same arguments are now heard in Europe. Brazil's InfoMoney reports that about 2,000 people marched in Dublin and another 1,200 in Helsinki against new data centers. The two cities host large clusters of the energy- and water-intensive facilities.

Not every government is retreating. Dan Tomlinson, Britain's growth minister, said the UK will not slow down on AI despite the US backlash. He called the current pace of investment "too low for what we need to stay at the forefront." London's position puts it in competition for data-center projects that may struggle to get permits in US states or Irish counties.

From an Austrian perspective, the AI build-out is a large, rate-sensitive capital project that depends on low-cost power, fast permits and cheap financing. All three inputs are now at risk at once. Rising short-term rates make the debt-financed portion more expensive, and a hostile Congress raises the regulatory risk on the remainder. The memory and storage makers fell furthest because they sit at the end of the order chain, where lower spending by the largest buyers shows up first.