Local pushback against data centers has been building for more than a year. Wall Street is now pricing it in.
Citi Research data, shared by The Information, shows U.S. data center bans and pauses sat near zero through mid-2025 before climbing to roughly 20 by December. The count accelerated sharply in 2026, passing 300 in June and topping 500 by October.
Tuesday's midterm results turned a slow-burning local issue into a national market event. AI and data center-linked stocks tumbled Thursday as Democrats' sweeping midterm victory fueled concerns about potential hurdles to the industry's rapid expansion.
The Nasdaq plummeted into correction territory and the Dow slid more than 1,000 points as traders dumped tech stocks. Chipmakers took the brunt.
The Philadelphia SE Semiconductor index dropped 10.2%, touching its lowest level in more than six months, dragged down by losses in heavyweights NVIDIA Corp. (NVDA) and Broadcom Inc. (AVGO).
Nasdaq 100 Faces a Trillion-Dollar Wipeout
The damage spread quickly across the largest tech names. Reuters reported the Nasdaq 100 was on track for a $1.8 trillion loss in market value as the Democratic win sparked fears of AI delays.
The Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100, carries heavy exposure to the same chip and AI names leading the decline.
Thursday's losses pile onto an already bruising stretch. More than $2 trillion in market value was set to be wiped from the Nasdaq 100 in October as Big Tech earnings intensified scrutiny of whether AI spending can generate returns, according to CNBC.
Neoclouds Lead the Rout
The steepest losses hit companies whose growth depends almost entirely on new capacity coming online. Neocloud stocks, which have become a barometer of investor anxiety over heavy AI spending, fell, with CoreWeave Inc. (CRWV) and Nebius Group N.V. (NBIS) slumping 11% and 15%, respectively.
Shares of CoreWeave and Nebius had already taken a hit Wednesday, when data-center operators lost ground as Democrats seized control of Congress.
Chipmakers followed. Micron Technology Inc. (MU) and Advanced Micro Devices Inc. (AMD) were down 16% at one point, according to CNBC, while Nvidia fell 9%, per MarketDash Pro market data.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), which builds the advanced processors filling those facilities, sits squarely in the path of any slowdown.
Asian chip stocks plunged overnight on concerns a Democratic-controlled Congress could usher in tighter restrictions on data center development, weighing on demand for AI infrastructure and chips.
Capacity At Risk
Analysts are starting to put numbers on the threat. UBS analysts estimated around 30% of expected U.S. data center capacity additions in 2028 could be at risk from potential construction pauses, Reuters reported.
The political worries land on an AI trade already under strain. Investors increasingly question whether the enormous capital spending required to build AI infrastructure will generate sufficient returns.
Even Big Tech Cannot Escape
Wednesday offered a brief twist. Markets, including U.S. hyperscalers, rallied as investors bet a potential slowdown in data center construction could boost the value of existing assets and curb Big Tech's massive AI spending.
Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT) each jumped 6%, putting them on track for their biggest one-day gains since late July, while Alphabet Inc. (GOOGL) rose 4.6%.
The cushion did not last. Amazon fell 3.9% Thursday and Alphabet shed 2.7%. Meta Platforms Inc. (META) slid 3.4% as most large-cap tech stocks lost ground after Wednesday's rally.
The Takeaway
Citi's data suggests the pressure on builders predates the election by months. Pauses were multiplying at the town and county level well before voters went to the polls.
A Democratic Congress, paired with new leadership in key data center states, gives the opposition a much larger stage.
