Neocloud Shares Drop After Democratic Midterm Victories

Shares of neocloud companies, including CoreWeave, Nebius, and Iren Limited, declined Wednesday following sweeping Democratic victories in the Tuesday midterm elections. The Democratic Party secured majorities in both the House of Representatives and the Senate and won the governor's race in Texas, a state projected to provide 30% of new compute capacity through 2030.

Investors fear these political shifts will create legislative hurdles that slow the construction of 800 to 1,000 data centers planned across the United States to fuel AI development. UBS estimates that 30% of new data centers expected in the next two years could be impacted by the election results.

This sell-off follows a period of volatility in October driven by concerns over high debt levels, rising borrowing costs, and high valuations. CoreWeave shares specifically dropped 46% over the last month.