AI shares fall as Democratic victories fuel data centre regulation fears

Artificial intelligence and tech stocks dive as investors mull new US restrictions. Investors have sold off shares of artificial intelligence and technology companies following the Democrats’ wins in several key US midterm elections, including Texas’ governor election, as they worry the new restrictions could put a damper on the growth of data centres, which require a lot of energy.

Gina Hinojosa, a Democrat, beat out the Republican Greg Abbott in Texas, which had been in Republican control for the past three decades. She has warned against the rush to build data centres and has called for more investigation into their effects on water and electricity.

This stoked worries among investors that Democratic wins might lead to increased regulation of AI infrastructure projects and jeopardize a key driver of investment in the tech industry.

US stock futures are plunging after the election results, the Nasdaq futures are down 2.24%, while the S&P 500 futures have declined 1.25% and the Dow futures have erased 0.79%, according to Fortune.

Water, although one of the crucial free inputs to data centre, is a sensitive issue for investors. Water allocation is very high on the agenda for states like Texas that have attracted huge tech investments.

Reuters added that global stocks also fell on Wednesday after Democrats won control of both houses of the US Congress, helping boost hopes of greater regulatory oversight of the tech sector.

Result of Election injects more uncertainty into a recent AI investment spree that has helped power the stock market rally.