Shares of Argan Inc. (AGX) cratered to $259.30 on November 5, extending a brutal two-day rout that has erased roughly 27% of the stock's value since it closed at $348.24 on November 3. The selloff began after the company reported record fiscal second-quarter results, but investors focused instead on a decline in backlog to $2.5 billion from $2.9 billion, as no major new power project was awarded in the period. A sector-wide storm made things worse: Democrats swept the U.S. midterm elections, sparking a broad selloff in AI data center stocks as investors braced for tighter regulatory oversight, potential rollbacks of tech tax incentives, and heightened antitrust scrutiny.

  • A $400 Million Backlog Hole Undercuts the Growth Story. Argan's $2.5 billion backlog as of July 31, 2026, included four U.S. gas-fired power plants with combined capacity exceeding 4.1 gigawatts. But that total is down from a record $3 billion just two quarters ago. With the stock having run up considerably earlier in the year, attention turned to award timing and the durability of margins. Backlog is a construction company's future revenue pipeline — when it shrinks, investors question whether growth is slowing.

  • Cost Overruns Sting the Industrial Segment. Argan's Industrial segment is facing profitability challenges as cost overruns on certain projects weigh on margins. Industrial revenues surged 111% year over year to $76.2 million, but gross margin — the profit on each dollar of revenue — declined to 7.3% from 12.5%.

CEO David Watson acknowledged the margin shortfall was due to a couple of projects where cost estimates became less favorable than initially expected.

These projects are expected to be finished over the next six months.

  • A Broader Political Headwind Hits AI-Linked Builders. Evercore ISI warned that "a more restrictive data center development environment" could create negative sentiment for AI infrastructure names.

In Q2 2026, at least 45 data center projects worth $68 billion were disrupted by local opposition. For Argan, whose future hinges on winning power plant contracts tied to data center demand, this adds a layer of uncertainty to the award pipeline.

  • Insiders Already Cashed Out at Higher Prices. In the first half of 2026, insiders sold about $119.4 million of stock during the rally that took shares to mid-year highs. Argan rallied sharply through the first half of 2026 as investors positioned it as a key builder of gas-fired plants for data centers, but by early July, multiple valuation models flagged the stock as significantly overvalued. Today's price is roughly half those peaks, yet at a P/E of ~24.6, the stock still prices in significant future growth — growth that a shrinking backlog and margin stumbles now put in question.