Chip Stocks and Neoclouds Sell Off on Election Results

Stocks of neoclouds CoreWeave and Nebius both dropped on Wednesday morning, even as most tech stocks rose, a sign that investors interpreted Tuesday’s votes in favor of anti-data center candidates as particularly bad for newer cloud firms.

In contrast, established cloud firms, Amazon, Microsoft and Alphabet all rose sharply. Amazon stock was up 7%, for instance, reflecting a broader market upswing. While the Democrat-takeover of congress could slow the AI revolution, the election results bring some certainty to th emarket, which is good for stocks. And older cloud firms already have data centers operating in many states, making them less susceptible to bans compared to newer companies.

Investors sold off chip design stocks Nvidia and Broadcom, along with memory chips Micron and SK Hynix, reflecting the expectation that a slowdown in data center development will reduce demand for AI chips and memory chips.