Shares of data center operators plunged on Wednesday after Democrats unexpectedly gained control of both houses of Congress in the U.S. midterm elections. Investors fear a Democratic-led government could increase regulatory scrutiny and slow the energy-intensive expansion of AI infrastructure, particularly in Texas and Georgia, where Democrats also won gubernatorial races.
The sell-off swept across the sector, with companies directly involved in AI data centers hit hardest. Hut 8 shares fell more than 21%. IREN (Iris Energy) and Core Scientific each dropped about 11% to 12%. Applied Digital also declined.
The market reaction reflects concerns that the new political landscape could hinder data center expansion amid backlash over the facilities’ significant power and water use.