AI stocks dip as Democrats secure Texas governor's office

AI-focused equities dropped in overnight trading following the victory of Democratic candidate Gina Hinojosa in the Texas governor's race, a state seen as a major hub for data-center development. Nasdaq-100 futures slipped 0.8%, while the State Street Technology Select Sector SPDR ETF fell 2% on the Robinhood platform. Individual stocks with direct data-center exposure posted larger declines, with CoreWeave down 7%, Nebius Group 4%, SpaceX 6% and Oracle 4% on Robinhood.

Investors had already priced in Democratic gains in the House and a possible Senate takeover, but the Texas outcome added fresh pressure on the AI trade. "The one thing that could really end up moving stuff though would be if Abbott were to lose Texas," said Scott Ladner, chief investment officer of Horizon Investments. He added that a loss could raise questions about future data-center locations in the state.

Wells Fargo's chief equity strategist Ohsung Kwon warned that the market reaction to the midterms could hinge on the Texas result, describing a Democratic win as a potential "left-tail event" for AI stocks. The party is also projected to retain governorships in other data-center-heavy states, including Georgia, Pennsylvania and Ohio, which together account for roughly 17% of planned U.S. data-center capacity.

Analysts have noted that data-center projects, once touted as economic development tools, have become more politically sensitive amid the midterm campaigns.