By Islam El-Sakka
AI stocks suffered their worst day on Wall Street in more than a year Thursday after Democrats regained control of Congress in the midterm elections, sparking investor fears of increased federal oversight for the data-center industry.
Market reaction
Nvidia shares fell 8 percent, Advanced Micro Devices dropped 16 percent, and cloud AI chip provider CoreWeave tumbled 15 percent. A financial report cited by The Independent suggests greater federal involvement could slow data-center construction by up to 30 percent by 2028. Voters also pushed back on data centers directly, rejecting or restricting projects in 35 of 41 ballot measures nationwide, according to Ballotpedia.
Impact on 401(k) plans
Most employer-sponsored 401(k) retirement accounts are invested in the S&P 500, where AI companies now represent half of the index. Younger workers typically hold a higher share of equities — averaging 89 percent in their 20s versus 57 percent in their 60s — making their portfolios more vulnerable to the AI sell-off. Financial advisor Nicole Carlon warned that retirees forced to withdraw funds during a downturn face longer-term portfolio damage, but she emphasized that a patient, long-term approach remains appropriate for those decades from retirement.
Tech sector broader decline
The Nasdaq, heavy with tech giants such as Apple, Microsoft, and Meta, slid 5.42 percent Thursday, outperforming the broader Dow Jones decline by 2 percentage points. The Texas governor’s race amplified concerns after Democrat Gina Hinojosa, a known critic of data centers, defeated incumbent Republican Greg Abbott. Texas is projected to account for nearly 30 percent of U.S. data-center capacity coming online in 2028. Despite the sell-off, Morningstar maintains a four-star rating on 11 leading AI firms and notes its Global Next Generation Artificial Intelligence Index is up 20.2 percent for the year.
