Micron Technology (NASDAQ:MU) stock is down 6.4% as of 2:58 p.m. ET on Wednesday, Nov. 4, after the Democratic sweep in the midterms raised doubts about the pace of the AI data center buildout.
The S&P 500 and the Nasdaq Composite are both up 1.7%.
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Why Democratic wins in Texas and Ohio rattle AI stocks
Democrats took both the House and the Senate on Tuesday night in a sweeping victory. They also won the governor’s races in Texas and Ohio, both of which are big data center hubs.
Data centers need land, power, and permits. Investors fear Democratic control will lead to a significant slowdown in construction of new projects. Memory companies like Micron need the capex to keep flowing in order to keep growing at the pace investors have come to expect.
How a data center slowdown could hurt Micron stock
Micron’s whole run this year — the stock is up 182% in 10 months — has been built on memory shortages driven by memory-hungry AI servers. If new data centers get delayed, that shortage eases, and Micron’s pricing power fades.
Image source: Getty Images.
While this likely won’t show up in the short term — projects with money already committed are probably safe at this point — I think this does not bode well for Micron in the long term.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.
Why Micron Stock Is Falling Today was originally published by The Motley Fool
