AI infrastructure shares fall
Warnings on Wall Street about the sustainability of the AI boom are growing after the Democrats' landslide victory in the US midterm elections. As community concerns over soaring electricity bills and job automation rapidly became political issues, shares in data center and related power equipment companies fell sharply.
Bloomberg reported on November 5, local time, that “shares in data center builders including CoreWeave, IREN and Nebius Group all declined, while power equipment companies such as GE Vernova and Vertiv, which had been viewed as beneficiaries of AI infrastructure investment, also struggled.”
“This contrasted with the technology-heavy Nasdaq 100 index closing more than 1% higher,” Bloomberg said. “Key semiconductor manufacturers including Nvidia and Marvell Technology also failed to avoid declines.”
Local opposition and permitting pressures
The market shock stemmed from local residents' opposition to data centers alongside changes in the political landscape. Matt Maley, chief strategist at US asset manager Miller Tabak, said that opposition to data centers being built in residents' own communities would immediately become a key issue for 2028.
“Complaints that data centers are pushing up utility bills are growing in major locations such as Texas,” Bloomberg said in its analysis. “Politicians are beginning a regulatory push aimed at this issue.”
Leading Wall Street strategists agreed that the election would make a slowdown in the AI investment boom inevitable. Brad Long, chief investment officer at US investment advisory firm Wellspire, said: “Data center demand remains solid, but difficult permitting procedures and bureaucratic regulation will push back the timing of capital expenditure.”
Steve Sosnick, a strategist at US online brokerage Interactive Brokers, also said the developments “could curb indiscriminate debt-financed investment and provide an opportunity to establish sound financial discipline.”
Expectations for continued infrastructure investment
Experts nevertheless do not expect the developments to derail AI technology development itself. Mabrouk Chetouane, head of global market strategy at French investment bank Natixis, said: “Given the structural reality of intensifying US-China competition for technological supremacy, the broader case for infrastructure development remains intact.”
Andrew Tyler, head of global market intelligence at JPMorgan Chase, the largest US bank, also forecast: “The market will move away from indiscriminate gains across AI-related stocks and toward selective differentiation, scrutinizing the benefits and feasibility for individual companies.”
Original Korean article: theguru.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
