AI Stocks Slide as Texas Elects Data Centre Moratorium Backer Gina Hinojosa

Hinojosa has spoken out in favour of a moratorium on AI data centres, and the Associated Press projected that she had defeated the Republican incumbent, CNBC reported. Wells Fargo figures cited by CNBC show Texas accounts for 27 per cent of planned US data centre capacity, measured in gigawatts. The reports did not say how a moratorium would work or what powers she would use to impose one.

The Texas result came as Democrats took control of both the House and the Senate, according to AFP reporting carried by Khaleej Times. President Donald Trump told The New York Times he was "absolutely willing" to accept the results. He also posted an image of a red cap bearing the word "VETO", which signalled how he plans to deal with Democratic legislation.

Market Reaction

According to CNBC, CoreWeave fell 7 per cent in overnight trading, Nebius Group fell 4 per cent and Oracle 4 per cent. SpaceX, which is headquartered in Texas, dropped 6 per cent. The State Street Technology Select Sector SPDR ETF was down 2 per cent on Robinhood. When CNBC reported, Nasdaq-100 futures were down 0.8 per cent, more than twice the fall in Dow futures.

The losses grew as the night went on. South Korea's Financial News reported that Nasdaq-100 futures were down 2.1 per cent and S&P 500 futures down 1.2 per cent before the New York open. It said Japan's Nikkei 225 fell 4.5 per cent during the session to its lowest level since May, and SoftBank dropped as much as 9.1 per cent. The site investingLive said the gap between Nasdaq and S&P 500 futures pointed to a sector-specific sell-off, not just a broad political discount.

Why Texas Matters

Wall Street strategists had singled out Texas before the vote. Ohsung Kwon, chief equity strategist at Wells Fargo, called a Democratic win there "a left-tail event to the AI trade", CNBC reported. Scott Ladner, chief investment officer at Horizon Investments, had said the result that "could really end up moving stuff" would be Abbott losing Texas. He also asked where data centres could be built if the state became less welcoming. Earlier this year, Bank of America's Michael Hartnett warned that a Democratic Senate combined with the Texas governorship could bring a slump in stocks of more than 10 per cent by year-end.

Governors can influence construction through land-use rules and permitting, according to Financial News. It quoted Priya Misra, a portfolio manager at J.P. Morgan Asset Management, telling the Financial Times that "There is bipartisan pushback against data center construction."

The concern goes beyond Texas. CNBC said Democrats were projected to win or keep the governorships of Georgia, Pennsylvania and Ohio. Wells Fargo estimates those states hold 7 per cent, 5 per cent and 5 per cent of planned US data centre gigawatts respectively. According to investingLive, Democratic candidates for governor in Georgia and Texas had called for temporary bans on new data centres, and Michigan's Democratic candidate, Jocelyn Benson, proposed something similar.

Optimal Advisory's Washington policy team wrote that the midterms were "likely to send a message to local and state officials" that blocking or delaying data centres can pay off politically, CNBC reported.

The sell-off follows a difficult few weeks for AI-linked stocks. The Nasdaq-100 fell into correction territory at the end of October amid concerns that data centre spending by hyperscalers, OpenAI and Anthropic was slowing.

The result also matters for Gulf investors. Abu Dhabi's MGX is among the equity backers of the Stargate venture, whose flagship campus is in Abilene, Texas, and Gulf sovereign and corporate capital has become a major source of funding for US AI infrastructure.