Not every corner of the market joined Wednesday's rally. Shares tied to artificial intelligence infrastructure, from data centers to chipmakers, moved in the opposite direction.
Data center operators were among the hardest-hit stocks following the election. Shares of Hut 8 fell 23 percent, IREN dropped 11 percent, and Core Scientific lost 10 percent after Democratic wins in Texas and Georgia, two states that have become hubs for data center construction to support AI computing. Texas's governor-elect has pledged a pause on new data center sites in the state, a policy shift that investors read as a signal of tighter scrutiny to come. A broader index of chip-related stocks fell about 3.1 percent to its lowest level in six months.
The pressure was not confined to the United States. In Japan, semiconductor shares on the Nikkei fell overnight on similar worries about tighter AI-related regulation. Qualcomm shares fell about 6.5 percent even after the company beat earnings expectations, while Arm Holdings slipped on weaker guidance and a disappointing handset revenue outlook. Not every AI-adjacent company suffered: AppLovin jumped roughly 24 percent after beating earnings expectations and raising its guidance, and Riot Platforms, a cryptocurrency and data center operator, climbed 14 percent after securing a $28 billion lease in Texas, suggesting the sector's path forward remains uneven rather than uniformly negative.
The divergence highlights a tension that is likely to continue: a Congress and a number of governors with new Democratic majorities are expected to take a more active interest in how quickly AI infrastructure gets built and how it is regulated, even as demand for the computing power behind artificial intelligence keeps growing.
Why did data center stocks fall while the broader market rallied?
Investors reacted to a pledge from Texas's incoming governor to pause new data center construction, along with broader expectations of tighter AI regulation under the new Congress.
Did all AI-related stocks fall?
No. Some, including AppLovin and Riot Platforms, rose on company-specific earnings and deal news even as data center and chip stocks broadly declined.