From 24/7 Wall St. · Chris Lange · · 1m 10s
Steve Weiss on AI Spending After Midterms
Midterms capped AI spending as Texas data center permits freeze hits chipmakers.
In brief
Midterms capped AI spending as Texas data center permits freeze hits chipmakers. Democrats' midterm wins triggered a Texas data center permit freeze, reducing AI infrastructure spending and hurting power companies like Vertiv and Vistra. Originally reported by 24/7 Wall St..
Midterms Capped AI Spending
Democrats swept the midterms, but chipmakers barely flinched as two ai data center stocks dropped sharply.
“The market is seeing the democratic victory as forced control on capex”
Texas Permit Freeze
Texas governor Gina Hinojosa promised a moratorium on data center construction after beating Greg Abbott.
“Gina hinojosa beat gov. greg abbott after promising a moratorium on data center construction and an end to subsidies and tax breaks for major developers”
Data Center Selloff
Vistra and Vertiv fell 13-12 percent as investors priced in texas data center slowdown.
“Vistra (nyse:vst | vst price prediction) $120.29 -13.83% vertiv (nyse:vr t) $205.55 -12.89%”
Chipmakers Less Affected
Nvidia and Broadcom dropped less as global data center projects can shift to other states or countries.
“If there’s going to be less data center build-out, there’s going to be pressure on the chips”
Texas Power Impact
Texas permit freeze directly hits local power sellers like Vistra, which saw shares drop 13.83 percent.
“Vistra traded in a wide range during the session. shares opened at $217.165 and hit a low of $202.585, before closing at $205.55”
Political Pushback
Morgan Stanley said texas governor would still face a republican legislature limiting changes to data center rules.
“In texas, the incoming democratic governor would still face a republican controlled state legislature, limiting the scope for some of the more ambitious changes”
Retirement Investors at Risk
401(k) investors could lose value as ai-heavy funds face reduced chipmaker spending.
“Broad index funds carry large positions in chipmakers and the cloud providers funding the expansion, so a capex slowdown would reach 401(k) balances even for investors who never bought an ai stock directly”
The headline
Democrats' midterm wins triggered a Texas data center permit freeze, reducing AI infrastructure spending and hurting power companies like Vertiv and Vistra.
