Intel Corporation (NASDAQ:INTC) stock is down 7.3% as of 1:43 p.m. ET on Thursday, Nov. 5, after Democrats’ sweeping midterm victory set off a sell-off in chip stocks.
The S&P 500 (SNPINDEX:^GSPC) and the Nasdaq Composite (NASDAQINDEX:^IXIC) are down 4% and 5.2%, respectively.
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Why Intel and chip stocks are falling after the midterms
Investors are dumping chipmakers two days after the election as investors try to anticipate the impacts of Democratic control of Congress as well as governorships in states essential to the AI infrastructure buildout like Texas, Georgia, and Ohio. Many Democrats, including the newly elected governor of Texas, promised to pause data center construction once in office.
The capex flowing into the data center build-out is the lifeblood of the AI trade and essential for Intel’s growth plans.
Intel’s government stake could draw Democratic scrutiny
What’s more, the U.S. government bought a 10% stake in the company last year for $8.9 billion, and Democrats — including the likely new chairs of both the Banking and Finance committees — were skeptics at the time. A fresh round of hearings on it is more than possible.
Image source: Getty Images.
Intel’s turnaround depends on data center and foundry demand from AI. Especially given the pullback in its PC business. That makes this a precarious time for Intel.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool has a disclosure policy.
Why Intel Stock Is Down Today was originally published by The Motley Fool
