Catenaa, Wednesday, November 04, 2026- US data center shares fell on Wednesday after Democrats made a historic win and took control of the US Senate.
According to Reuters, data center operators lost ground, with Core Scientific down more than 5% and Iren also down more than 5%. Applied Digital and CoreWeave fell by 5% and 6%, respectively.
Growing public opposition to AI infrastructure development has added pressure on data center operators following the Democratic election victory. Investors are reassessing whether closer congressional scrutiny could affect future expansion plans and the returns on substantial AI-related capital expenditure, according to Reuters.
Democrats secured control of both chambers of Congress following victories in several traditionally Republican areas. The party also recorded significant gains in Texas and Georgia, where large data center projects have attracted substantial investment. The election outcome could increase scrutiny of AI infrastructure development.
Reuters reported that analysts expect a Democratic-led Congress to increase investigations and hearings on AI infrastructure expansion, although it is unlikely any new legislation can slow data center expansion.
Though analysts doubt any legislation could meaningfully stall data center construction, a Democratic-led Congress increases the odds of more hearings and investigations into the AI buildout.
“AI has been an enormous engine powering the US economy, so any curbs on its future development could threaten to put the brakes on growth,” Kit Rees, investment strategist at Quilter, told Reuters.
Moreover, Reuters reported that shares of Elon Musk’s rocket and space technology company SpaceX dropped 7%, while EV maker Tesla was down 4.7%.
“It puts into doubt a potential merger between SpaceX and Tesla. While Congress cannot stop a merger, they could slow it down via extra scrutiny,” Kathleen Brooks, Research Director at XTB, told Reuters.
“Musk had poured hundreds of millions into the Republican Party ahead of these elections…we could see stocks linked to Musk struggle now that his political enemies have won back control of Congress,” she told Reuters.
Reuters also reported that Defense stocks such as Northrop Grumman fell over 3%, RTX by 2.8%, Lockheed Martin by 4%, and L3Harris lost over 2% each.
“The sector had been underpinned by expectations that the $1.5-trillion budget request by Trump would not face headwinds in a Republican-dominated Congress,” Reuters said.
However, in a Democrat-led Congress, analysts project the funding could fall short of expectations.
