Quarterly Commodities Outlook is available for free now. Download your report →
Market Analyst
Two hours in Thursday’s session, the Nasdaq was down around 4%, having wiped more than $1 trillion off U.S. stock market valuations, and opposition to AI data centers was part of the reason. AI data centers became a risk for tech stocks once newly elected Democratic officials pledged to slow or halt their construction, adding a regulatory threat to a sector already under pressure over AI spending. The selling came even after global equities had rallied on the U.S. midterm results. For tech investors, the politics of power and land use now sits alongside earnings as a driver of AI stock prices.
Fawad Razaqzada, StoneX Media Market Analyst at StoneX, covers forex, equity indices, commodities and cryptocurrencies through a mix of macroeconomics and technical analysis. That coverage gives insight into how AI spending, chipmaker earnings and U.S. politics are driving the Nasdaq.
Newly elected Democratic officials have turned AI data centers into a political target after the U.S. midterm elections, pledging to curb new construction. "Many newly elected Democratic governors, attorneys general, and lawmakers have pledged to slow or completely halt the construction of AI data centers," Razaqzada says. The pressure stems from voters, who have increasingly voiced opposition to the immense power and land requirements of these facilities. The result is a regulatory risk that investors in AI-related stocks now weigh alongside earnings.
Tech stocks are absorbing the data center threat at a moment when AI spending is already under scrutiny. According to Razaqzada, the "prospect of tighter regulation on the sector under a Democrat-controlled Congress is also unnerving investors". Notably, that regulatory worry lands on top of doubts over returns, since cash outlays on AI are still surging while AI-driven profitability fails to match lofty analyst expectations. Despite a sharp rally in global equities on the midterm results, semiconductor stocks such as Arm Holdings fell sharply after their earnings, leaving the Nasdaq among the weaker major indices.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Fawad Razaqzada, StoneX Media Market Analyst
StoneX TV content is created, produced, and distributed solely by StoneX Media Ltd (“StoneX TV”) and is provided for informational and educational purposes only. StoneX TV does not provide investment, financial, legal, or tax advice and does not make any recommendation or endorsement of any investment strategy, transaction, or financial instrument. Nothing in this content constitutes, or should be construed as, investment advice or a recommendation to buy, sell, or hold any financial instrument, including securities, futures, derivatives, digital assets, foreign exchange products, or CFDs. This content does not constitute an offer, invitation, or solicitation to engage in any investment activity. The information presented is general in nature and is not tailored to the financial situation, investment objectives, or risk tolerance of any specific person. You should not rely on this content as a substitute for independent professional advice. Investing and trading in financial instruments involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Any views or opinions expressed are those of the presenter at the time of publication and are subject to change without notice. Such views may not necessarily reflect those of StoneX Media Ltd or its affiliates. StoneX Media Ltd and its affiliates, including StoneX Group Inc., may from time to time have positions in, or engage in transactions involving, the financial instruments referenced. This content may include general market commentary and opinion. It does not constitute independent investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. StoneX Media Ltd is not authorised or regulated to provide investment services and does not act in a fiduciary capacity. StoneX Media Ltd is incorporated in Ireland and operates in accordance with applicable Irish law. It is a wholly owned subsidiary of StoneX Group Inc. and is a separate legal entity from other subsidiaries within the StoneX Group, which may be regulated in various jurisdictions. StoneX Media Ltd does not act on behalf of, or provide services for, any regulated affiliate. This content is not directed at, and may not be distributed to, any person in any jurisdiction where such distribution would be contrary to local laws or regulations. Supporting documentation for any claims, comparisons, statistics, or technical data may be made available upon reasonable request, where applicable.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
The FTSE 100's light tech exposure is cushioning it while U.S. chip makers and AI stocks sell off. The gap shows how sector mix decides which markets absorb a Wall Street tech shock.
Opposition to AI data centers has become a new source of risk for tech stocks after the U.S. midterm elections. Pledges to slow construction now add to existing doubts over the returns on AI spending.
Wall Street is treating a divided Congress as a source of policy stability rather than a threat. Lower Treasury yields and fewer expected policy surprises are feeding the equity rally that followed the U.S. midterm elections.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve, our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
