Key Points
ใปAfter the Democrats won both chambers of Congress, the Nasdaq Composite fell 5.52 percent on November 5, 2026, according to Reuters, and all 33 sectors of the Tokyo Stock Exchange fell on November 6.
ใปBefore the vote, investors were already wary that a Democratic win would advance data center rules driven by power bills and local opposition, Reuters reported on October 22.
ใปThe Democratic bill plans Reuters reported on November 6 aim to protect households and AI safety, while markets weigh their effect on investment payback and the pace of construction.
AI Stocks Plunge in the US, and Japanese Stocks Fall Across the Board on November 6
US stocks fell sharply on November 5, 2026, led by AI-related shares. The Nasdaq Composite closed down 5.52 percent at 24,315.00, its biggest daily drop in 19 months, according to Reuters and the Associated Press. The S&P 500 fell 4.36 percent, the Dow Jones Industrial Average fell 3.44 percent and the Philadelphia Semiconductor Index fell more than 12 percent.
A day earlier, on November 4, the Dow had risen more than 1,500 points after Democrats won majorities in both chambers of Congress. Reuters attributed the November 5 selloff to fears that regulations restricting data center construction would tighten.
In Tokyo, the Nikkei 225 fell 893 yen on November 4, while US votes were still being counted, and fell another 1,110 yen to 61,077.90 on November 5. On November 5 the broader TOPIX index rose 1.16 percent, and the selling was concentrated in large chip-related stocks.
Tokyo stocks then fell across the board on November 6. The Nikkei closed down 3,643.13 yen, or 5.96 percent, at 57,434.77, its third-largest point drop on record, according to Nikkei. The TOPIX fell 5.90 percent to 3,707.99, and all 33 sectors of the Tokyo Stock Exchange closed lower. According to Nikkei, the index ended more than 20 percent below its June 25 record high.
Chip-related stocks led the declines. Memory-chip maker Kioxia Holdings closed down 8.72 percent at 8,511 yen, according to SBI Securities’ closing quote. Advantest fell 4.99 percent and Tokyo Electron 5.60 percent, while Disco fell only 1.42 percent.
Other Asian markets also fell on November 6, by very different amounts. South Korea’s KOSPI dropped more than 8 percent right after the open, triggering a 20-minute trading halt, and closed down 6.02 percent at 5,059.69, according to Yonhap. Taiwan’s weighted index closed down 4.51 percent at 39,701.64, according to Taiwan’s Central News Agency. Australia’s S&P/ASX 200 closed about 0.5 percent lower, and in mainland China and Hong Kong, the Shanghai Composite was down 1 percent and the Hang Seng 0.3 percent as of 02:33 GMT, about 11:30 a.m. Tokyo time, according to Investing.com. European markets had not yet opened as of just after 4 p.m. Tokyo time on November 6, when this article was checked.
In US trading on November 6, the Nasdaq closed up 1.1 percent at 24,579.42 and the S&P 500 up 0.3 percent at 7,376.86, according to the Associated Press. After its 5.52 percent fall the day before, the Nasdaq recovered only part of the loss. The Dow fell 0.5 percent to 51,285.73, more S&P 500 stocks fell than rose, according to the AP, and the S&P 500 ended the week down 2.7 percent.
Among individual stocks, AI chipmaker Nvidia closed up 2.78 percent at $186.64, memory-chip maker Micron Technology up 5.12 percent at $690.00 and neocloud CoreWeave up 6.28 percent at $46.40, according to Investing.com’s historical data. Data-storage maker Western Digital fell 1.44 percent to $263.78, its third straight decline.
The same day, the US Bureau of Labor Statistics reported that nonfarm payroll employment rose by 165,000 in October 2026 and that the unemployment rate changed little at 4.1 percent.
Reuters reported on November 6 that Democrats plan to introduce bills after they take control of Congress in January: to shield consumers from rising electricity costs tied to data centers, to require independent testing of advanced AI systems, and to clarify when AI companies can be held liable for harm, according to lawmakers, congressional aides and advocates. Senator Chuck Schumer, expected to become majority leader, said on November 5 that protecting consumers from higher energy costs linked to data centers would be among his priorities next year, according to the same Reuters report.
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The Doubts Already Building Around AI Data Centers
A hyperscaler is a company, such as Alphabet, Microsoft or Amazon, that builds and runs data centers at enormous scale and rents out computing capacity. A neocloud is a newer company that buys large numbers of AI chips, often with borrowed money, and rents that computing capacity to AI developers and to the hyperscalers themselves.
Data centers are paid for first and earn later
AI computing runs on large numbers of chips installed in data centers. The cost of buildings and equipment is paid up front, while revenue arrives over several years under usage contracts. US technology companies have kept raising this spending, and Alphabet alone has forecast capital expenditure of $195 billion to $205 billion this year, according to CNBC’s October 29, 2026 report.
The larger the investment, the harder the stock market looks at when, and how much, it will be recovered. Neoclouds that build with borrowed money are especially sensitive to lenders and interest rates. In mid-October, the shares and bonds of CoreWeave, the best-known neocloud, fell sharply and pulled AI and chip stocks down with them.
Worries about the buyers reach the suppliers. In Japan, Advantest (chip testing equipment), Tokyo Electron (chipmaking equipment), Kioxia (memory chips for data storage) and cable makers such as Fujikura had risen strongly on AI demand, so they tend to come under selling pressure when investors expect US spending to slow.
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CoreWeave’s Credit Worries and the AI Chip Selloff
Power and local consent set the pace of construction
A data center cannot run until it is connected to the power grid, however many chips it has. In the United States, the median time from applying for a grid connection to commercial operation has exceeded five years for generation and storage projects, according to reports cited in our September article. Lead times for large power transformers have also lengthened.
Local opposition has hardened as well. Concerns about higher electricity bills, water use and noise have stalled plans at the town level and led some developers to withdraw. Before the election, data centers had already become an issue in governors’ races and in elections for the officials who set electricity rates, according to Reuters.
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GPT-6 Sol, Luna and Claude Opus 5.5: The Price of Intelligence
Late-October earnings brought the doubts into view
A week before the election, big-company results moved the market. Alphabet’s free cash flow, the cash left after capital spending, was negative $9.07 billion for the September quarter, and its shares fell 13 percent on October 29, their worst day on record, according to CNBC.
Microsoft reported strong cloud growth, but capital spending came in below its own forecast. According to Reuters, an investor relations executive said this reflected delays in the handover of data center capacity expected from third parties, which shifted the timing of spending, not weaker demand. On October 30, Intel fell about 29 percent after issuing weak revenue guidance, according to market reports, and selling spread across chip stocks.
Before the election, then, two questions were already moving prices: whether the spending generates enough cash, and whether the facilities can be built on schedule.
| Date (local) | Market | What happened |
|---|---|---|
| Oct 29 | US | Alphabet falls 13% on negative free cash flow |
| Oct 30 | US | Intel falls about 29% on weak guidance |
| Nov 3 | US | Midterm elections and 41 local data center ballot measures |
| Nov 4 | Tokyo | Nikkei falls 893 yen as US votes are counted |
| Nov 4 | US | Dow up more than 1,500 points; chip index down about 3% |
| Nov 5 | Tokyo | Nikkei falls 1,110 yen; TOPIX rises 1.16% |
| Nov 5 | US | Nasdaq falls 5.52% |
Sources: CNBC, Reuters, AP, Fisco, Media-IR. Tokyo closes before New York opens on the same date.
What the election decided, and what it did not
In the November 3 midterms, Democrats won majorities in both the House and the Senate. The same ballots included governor’s races and local measures, and for data centers these sit closer to individual projects: building permits and grid connections are decided mainly through state agencies and local governments. Which body decides what differs by state, and a governor does not approve every project directly.
On November 3, voters in 10 states decided 41 local ballot measures on data centers. According to CNBC’s count, results favored caution about development in every measure except one in Harwood, North Dakota, through the approval of limits or the rejection of projects. Ballotpedia’s November 3 overview shows the measures ranged from outright bans and size caps to moratoriums and zoning changes, and nine were non-binding. In a CNBC voter poll, 56 percent said data centers were a crucial or major factor in their vote.
Before the vote, The Wall Street Journal reported that investors were watching the governor’s races in Texas, Ohio and Georgia and many local ballot measures. Democrats who proposed data center moratoriums won governor’s races in Texas, Georgia and Ohio, according to CNBC’s November 4 report. In Texas, governor-elect Gina Hinojosa said in an October 22 video that she would pause data center approvals until the Legislature passes protections for Texans, according to The Texas Tribune. She takes office on January 19.
Texas had already moved to pause approvals under its Republican governor, Greg Abbott, before the election. On September 21, 2026, according to the governor’s office, he directed the state environmental agency, TCEQ, to halt data center permits until the grid operator ERCOT completes its audit, and ordered an audit of data centers in ERCOT’s interconnection process. Whether that pause and the governor-elect’s promised one will run back to back has not been decided.
What the election settled was the control of Congress and the results of state and local races. Whether new pauses or regulations in line with campaign pledges will actually take effect is still to be decided.
What Democrats plan to pursue in the next Congress
The three planned bills mark a sharp shift from the current Republican-led Congress, which largely focused on promoting AI development and declined to pass legislation restricting aspects of the technology, according to Reuters’ November 6 report. Democrats aim to keep the power costs of energy-hungry data centers from landing on household electricity bills, and to make AI safety and liability for harm clearer.
Voter sentiment is part of the background. Most US voters think the Trump administration and Congress are not taking AI risks seriously enough and want new rules, according to a Reuters poll published in October 2026. Representative Zoe Lofgren, who is seeking to chair the House Science Committee, said Democrats would focus on “responsible regulations for AI while also fostering innovation,” Reuters reported.
Control of committees lets the majority hold hearings and call industry leaders to testify even if bills do not pass. In October, Lofgren and other Democratic House committee leaders asked OpenAI, Anthropic, Meta, Google and SpaceX to detail their security practices and report cases of AI tools acting in ways their designers did not intend, according to Reuters.
What Reuters described is a plan for the next Congress, not bills that have been introduced or passed. The new Congress convenes on January 3, 2027. President Trump has dismissed calls for mandatory AI rules, and if he vetoes a bill, overriding the veto takes a two-thirds vote in each chamber.
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The Order in Which New York and Tokyo Moved, and How Far It Spread
From pre-election watching to the November 6 report: the order of events
Whether Democrats would win both chambers was a focus for AI investors before the vote. Reuters reported on October 22, 2026 that market watchers saw a Democratic sweep as the outcome posing the greatest AI-related threat, as public opposition to data centers’ strain on energy costs and the environment grew; a Reuters/Ipsos poll showed 69 percent of Democratic registered voters backed limits on building data centers, compared with 43 percent of Republicans.
In the same analysis, analysts doubted that a bill significantly stalling construction would become law, since President Trump would likely block it, and expected more hearings and investigations instead. Sekahan’s October article on the midterms also noted that investors were watching governor and utility-commission races.
As counting continued on November 4, Reuters reported that data center opponents were among the biggest winners of the Democratic landslide and that investors expected tougher regulation; US-based data center stocks slid as the sweep became apparent. On November 5, Reuters cited fears of AI regulation as the main reason for the Nasdaq’s plunge. Markets treated the direction they had watched before the vote as more likely after the sweep.
Democrats’ specific plans were reported later, on November 6. A reposted copy of the Reuters story is time-stamped 6:05 a.m. US Eastern time on November 6 (8:05 p.m. in Tokyo), after Tokyo’s November 6 session had closed and before New York’s opened. The US plunge on November 5 and Tokyo’s broad selloff on November 6 came before the report.
In the US session that followed the report, the Nasdaq rose slightly. How the report affected prices is unknown, and, as the next sections show, other factors besides the election also weighed on stocks.
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Why did Tokyo move first?
Trading in Tokyo ends before trading in New York begins on the same date. Japan’s November 4 session took place while US votes were being counted, and chip and cable stocks were sold as reports of Democratic gains and data center regulation spread.
That selling was not only about the election. Japanese market reports from the same day, by Fisco, also cited worries about further rate hikes this year, high long-term interest rates and disappointment with Apple’s results. It continued a decline in AI and chip stocks that had begun in late October.
Japan’s November 5 selling followed a roughly 3 percent fall in the US chip index the night before, and the Tokyo session ended before New York’s November 5 plunge. The Nikkei fell while the TOPIX rose because the selling was concentrated in heavily weighted names such as Advantest and Tokyo Electron, while most stocks rose.
On November 4, hyperscalers and borrowers moved in opposite directions
On November 4 the overall US market rose, but AI stocks split. Amazon, Microsoft and Alphabet rose sharply, while CoreWeave fell about 10 percent, according to CNBC.
The gains were attributed to reduced political uncertainty. An asset manager at JPMorgan Asset Management said the results removed uncertainty in the market. For the decliners, the brokerage Baird called the results a “sentiment headwind” for neoclouds, according to CNBC’s November 4 report.
Companies that build with their own cash and companies that borrow to build and lease to the giants feel construction delays differently. The day’s moves fit the view that borrowers are more exposed to delays. Each company also had its own results, finances and valuation, so the day’s moves alone cannot pin down a single cause.
Why did the selling spread to the whole market on November 5?
On November 5 the selling hit large technology stocks too. Reuters cited fears of AI regulation, and the Associated Press cited worries that higher borrowing costs would slow data center construction, along with the view that AI stocks had run up too far.
Other news came the same day. Bloomberg reported, citing people familiar with the matter, that Microsoft had tightened oversight of data center projects with neoclouds including Nebius, IREN and Nscale and was stepping away from projects it considered risky, according to Reuters’ summary of that report. That gave names to the late-October worry about whether projects could be completed on time.
Reuters’ November 5 report also described market mechanics that may have spread the selling beyond AI stocks. Analysts said much of the selling reflected an unwind of the previous session’s rally and of crowded AI positions. Put premiums, the price of insurance against a fall, ran at about twice their typical level across index products, according to the options analytics service Mercury Alerts as cited by Reuters.
Investors trying to get ahead of selling from strategies that react to volatility, and leveraged and inverse exchange-traded funds that rebalance near the close, can amplify moves. Nomura estimated in an intraday note, cited by Reuters, that leveraged ETFs would sell about $47 billion of stocks into the close. That was a projection, not a confirmed amount sold.
In Tokyo, the selling spread differently from day to day. On November 5, the Nikkei fell even though 161 of its 225 stocks rose, according to Fisco. On November 6, all 33 sectors closed lower, and the Nikkei Semiconductor Stock Index fell 5.94 percent, about the same as the TOPIX’s 5.90 percent, according to Nikkei’s index data. Even among chip-related stocks, the drop ranged from Kioxia’s 8.72 percent to Disco’s 1.42 percent. The first pattern shows selling concentrated in particular stocks, the second a broad reduction in positions. A broad selloff does not necessarily mean every company’s earnings outlook worsened in the same way; it can also come from investors cutting risk across the whole market. The mechanics above were reported in the United States, and it has not been confirmed that they worked to the same degree in Tokyo. How much each one contributed has not been established either.
Qualcomm also missed expectations, and a Federal Reserve official mentioned the possibility of further rate increases, according to Reuters. How much each factor contributed cannot be separated from the reporting. IREN, which fell sharply, reported results after the November 5 close, so its results were not a cause of that day’s drop.
Did Asian markets all fall by the same amount?
No. On November 6, Japan, South Korea and Taiwan fell by roughly 4 to 6 percent, and South Korea’s market was briefly halted after an 8 percent drop at the open. Australia’s benchmark closed about 0.5 percent lower, and mainland China and Hong Kong were down 1 percent or less as of midday Tokyo time.
Japan, South Korea and Taiwan are markets where chipmakers and chip-equipment makers that sell into AI carry heavy weight in the main indexes. Samsung Electronics and SK Hynix in South Korea and TSMC in Taiwan were reported among the stocks sold heavily. Markets where AI-related chip stocks weigh more generally fell more, but currencies, interest rates and local factors also differ, so this one factor cannot explain the gaps on its own.
What do Democrats aim for, and what do markets weigh?
From Democrats’ side, cost-sharing for data centers and AI safety are policies to protect people who pay electricity bills and people who use AI. From the side of markets and companies, the same policies bear on whether huge capital spending can be recovered on schedule and how fast construction can proceed.
Federal restrictions could hurt the industry’s profits if they slow the release of new models or prompt companies to change how their AI tools perform, Reuters reported on November 6. Goldman Sachs said Democratic victories at the state and local level would likely lead to temporary halts to projects, potentially affecting some 45 percent of planned US data center capacity expansion, though it expects the halts to be short-lived, according to Reuters’ November 4 report.
Views differ. HSBC analysts wrote that a feasible outcome is more regulation and oversight rather than broad moratoriums, or projects moving from Texas to other states, according to the same Reuters report. Before the vote, a BNY Wealth analyst said policy uncertainty was unlikely to derail the AI investment theme but could disrupt its timing and cost, according to Reuters’ October 22 analysis.
Nomura analysts wrote on November 4 that much of the data center capacity expected to come online in 2027 is already under construction, and that projects planned for 2028 face greater exposure to permitting delays and regulatory uncertainty, according to CNBC’s November 5 report. On that view, part of the selloff may have priced in supply several years away that is not yet decided.
Regulation follows different paths at the federal, state and local levels. A federal law passed by Congress can be vetoed by President Trump, a Republican. Permits and zoning, however, are mainly decided by states and local governments, where the presidential veto does not reach.
For individual construction projects, what matters is not only the makeup of Congress but also how far state and local permitting and grid-connection procedures move. How much the congressional, state and local results each moved stock prices cannot be separated from the price moves.
Supporters of regulation argue that data centers should pay for the power and water infrastructure they use. The Data Center Coalition says data centers bring jobs and tax revenue, according to The Texas Tribune. A blanket pause raises the cost of delay and financing, while rules that require cost-sharing and disclosure leave room to keep building while easing the burden on residents. Which approach prevails will shape how long the delays last.
A policy’s aims and its actual effects are separate questions. Which bills are introduced, how far they pass, and how electricity bills, construction speed and AI safety actually change are not yet known.
A small US gain on November 6 made up only part of the fall
The Nasdaq and the S&P 500 closed slightly higher on November 6, but the gain made up only part of the previous day’s fall, the Dow fell again, and more stocks fell than rose. The heavy selling of November 5 did not continue, yet the day does not show a broad recovery, a bottom, or an easing of the worries about regulation and payback. Individual stocks moved apart as well. Nvidia and Micron, which rose on November 6, still closed about 10 percent and about 19 percent below their November 3 Election Day closes, according to Investing.com’s historical data. Western Digital fell again and ended about 24 percent below its November 3 close. Neither the gains nor the declines in individual stocks say much about what comes next. Japan’s broad selloff on November 6 ended before this US session began.
If selling amplified by market mechanics unwinds, or clearer regulatory details reduce uncertainty, part of the drop may come to look like temporary selling. If big companies’ capital spending or chip orders actually slow, if interest rates rise, or if worries grow about the financing of AI cloud companies that build with borrowed money, the drop is more likely to be read as a change in outlook.
Several checkpoints are scheduled. How the October jobs report, released on November 6, affects the rate outlook is one of them. CoreWeave said in its October 27, 2026 announcement that it will hold a conference call on November 10 to discuss third-quarter results, a gauge of how borrowers that build data centers are financing themselves. Orders and capital-spending outlooks from Japanese chip-related companies will show whether AI demand is holding up. Whether pauses promised in campaigns are actually put in place at the state and local level will matter over a longer period.
These checkpoints will also help separate how much of the drop was temporary selling and how much reflected a change in outlook.
Japanese Reactions to the AI Stock Selloff After the US Midterms
In Japan, the selloff began while US votes were still being counted on November 4, and investors on X discussed it in real time. The posts below are Japanese-language posts on X from the afternoon of November 4 to the evening of November 5, Japan time, all before US trading on November 6. They are a small set, not a random sample, and not a measure of opinion in Japan. The translations are ours, and any market views in the posts are the authors’ own.
A user named ใใใใ, whose display name says university student investor, wrote:
ๆฐไธปๅ ใใขใกใชใซใฎใใผใฟใปใณใฟใผ่ฆๅถใใใใใฃใฆใใผใฟใปใฏใทใงใณ่ฒทใใใใจใใ่ซ็ใๅใใใใใใพใใงใ้ฐๅฒๆฐใงไธใใใใใชใใใ
— ใใใใใๅคงๅญฆ็ๆ่ณๅฎถ (@kinokonootomo) November 4, 2026
ใใใใใทใชใณใณใใฌใผใฎๅฅดใใฏๆฐไธปๅ ใซ็ฎ้ใใพใใฃใฆใใใ่ฆๅถใชใใใงใใใใใฃใฆ่ฉฑ
I don’t get the logic that Data Section (a Japanese data center company) gets bought because the Democrats will regulate US data centers, but, well, things go up on mood… And to begin with, the Silicon Valley people donate heavily to the Democrats, so can they even regulate it? (translated)
A user named Lizzy wrote:
ไฝๅบฆใใในใใใใใฉ
— Lizzy@ใใถ (@lizzy_kabu) November 4, 2026
ๆฐไธปๅ ใใใผใฟใปใณใฟใผ่ฆๅถๆดพใ ใใใใใงใซๅฎๅใใฆๅใใฆใใๆขๅญใฎใใผใฟใปใณใฟใผใฏ็ธๅฏพ็ใซไพกๅคใใใใใใ ใจไฟกใใฆใใใพใใใใผใปใฏใฏใใใๅผทใใใๆฏใใใใฆใใฏใใ
I’ll post this again and again: because the Democrats favor regulating data centers, I believe existing data centers that are already up and running become relatively more valuable. Data Section is strong there, so that should be what’s holding it up. (translated)
A user named ใฏใ, a trader in Japanese and US stocks, wrote:
ๆฐไธปๅ ใๅใคใจใใผใฟใปใณใฟใผใ่ฆๅถใใใใจใใฎใในใใๆตใใฆใใใใฉใใขใกใชใซใ่ใใกใใใใชใใ
— ใฏใ๏ผ ๆฅ็ฑณใใฌใผใใผ (@nichi_yo) November 4, 2026
ๆฌๅฝใซใขใกใชใซใฎๅฑๆฉใซ้ฅใใจใใไฝๆ ใ๏ผใคใฎๅ ใฏๅๅใใ ใใใ ใใใขใกใชใซใฏๅผทใ๐
Posts are going around saying data centers will be regulated if the Democrats win, but don’t underestimate America. When America is truly in crisis, somehow the two parties start cooperating. That’s why America is strong. (translated)
A user who posts US stock market commentary as ๆ่ณใซใใใฉ wrote:
AIใใผใฟใปใณใฟใผใฎๅปบ่จญ็ฆๆญขใป่ฆๅถใใปใผๆฑบใพใฃใ็ตๆใใใคใใผในใฑใผใฉใผใฎๆ ชไพกใ็ไธใใใใฎใฏไฝใจใ็ฎ่ใ ใช pic.twitter.com/ZQC5ykgFZ0
— ๆ่ณใซใใใฉ ๏ผ ็ฑณๅฝๆ ช็ธๅ ดๅฎๆณ (@Capybara_Stock) November 4, 2026
The result is that bans and regulations on building AI data centers are all but decided, and yet hyperscaler stocks are soaring. Quite ironic. (translated)
A user named ใใใฃใคใใถใใฃใใ wrote:
็ตๅฑใใใผใฟใปใณใฟ่ฆๅถๆณใคใใใจใใฉใณใใๆๅฆๆจฉ็บๅใใใใใใฉ
— ใใใฃใคใใถใใฃใใ (@7Y8k3d17SozCE0w) November 5, 2026
ๅฐๅบใใจใฎๅปบ่จญ่จฑๅฏๆจฉๆใคๅท็ฅไบใๆฐไธปๅ ใซๅใใใใฎใจใๅคงไบใชๅทใๅใใใใฎใ่ดๅฝๅทใฎใใใง
In the end, if they make a data center regulation law, Trump will veto it. But losing the governorships, which hold the power to permit construction district by district, and losing key states to the Democrats seem to be the fatal blow. (translated)
Doubts About Payback and Construction Met the Election Results
The AI stock plunge in the US and Japan’s broad selloff on November 6 were not caused by the election results alone. Doubts about whether AI data center spending would pay off and whether facilities could be built on schedule had been building before the vote. Democrats then won majorities in both chambers of Congress and local ballot measures and governor’s races produced cautious results, strengthening the view that regulation would advance. Tokyo and New York reacted in different ways, in the order set by the time difference. Tokyo then fell across the board on November 6, while declines elsewhere in Asia varied widely. The same worry may have been shared across both markets, but it cannot be confirmed that the moves formed a single chain. The Nasdaq and the S&P 500 rose slightly on November 6, but they recovered only part of the previous day’s loss, and the Dow fell again.
What Democrats plan to pursue in the next Congress is protecting households from electricity costs and making AI safety and liability for harm clearer. What markets are weighing is how those policies affect the payback on investment and the speed of construction. What has been reported is a plan, and which policies take what form, and with what effect, is not yet known.
Watching how the next Congress handles these bills, whether pauses promised in campaigns actually take effect, how projects planned for 2028 and beyond proceed, and how companies’ results and financing terms change will show whether this reading of the selloff holds. Those signals may still not settle how much each factor drove each day’s moves. What remains useful is to keep two questions apart: whether AI demand is strong, and whether the facilities that serve it can be built on time.
Frequently Asked Questions
Did the Democratic midterm win cause the AI stock plunge?
Not on its own. The Nasdaq’s 5.52 percent drop on November 5, 2026 followed late-October declines driven by Alphabet’s negative free cash flow and Intel’s weak guidance, and Reuters, AP and Bloomberg cited several factors that day, including regulation fears, borrowing costs, valuations and Microsoft’s tighter oversight of neocloud projects.
Why did Japanese stocks fall before the US selloff?
Because Tokyo trades first. Japan’s November 4 session took place while US votes were being counted, and its November 5 session ended before New York’s November 5 plunge, according to market reports by Fisco. Japanese selling followed the US chip index’s roughly 3 percent fall on November 4 and was concentrated in Advantest and Tokyo Electron.
Have new data center regulations been enacted after the midterms?
No new federal regulation has been enacted. Democrats plan to introduce AI and data center bills after the new Congress convenes in January 2027, according to Reuters’ November 6 report, and if President Trump vetoes a bill, overriding the veto takes two-thirds of each chamber. In the November 3, 2026 local ballot measures, results favored caution in 40 of 41 measures, according to CNBC, and Texas governor-elect Gina Hinojosa has pledged a pause after taking office on January 19, 2027, according to The Texas Tribune. Before the election, Governor Abbott had also directed a pause on data center permits during an audit.
What AI bills are Democrats planning after the 2026 midterms?
Three kinds, according to Reuters’ November 6, 2026 report: bills to shield consumers from rising electricity costs tied to data centers, to require independent testing of advanced AI systems, and to clarify when AI companies can be held liable for harm. They are plans for the Congress that convenes in January 2027, not bills that have been introduced or passed.
Did stock markets crash worldwide after the US midterms?
Not uniformly. On November 6, 2026, Japan’s Nikkei 225 fell 5.96 percent and South Korea’s KOSPI fell 6.02 percent, according to Nikkei and Yonhap, and Taiwan’s index fell 4.51 percent, according to Taiwan’s Central News Agency. Australia’s S&P/ASX 200 fell only about 0.5 percent, mainland China and Hong Kong were down 1 percent or less as of midday Tokyo time, according to Investing.com, and European markets had not yet opened as of just after 4 p.m. Tokyo time on November 6.
Did US stocks bounce back after the November 5 plunge?
Only partly. On November 6, 2026, the Nasdaq rose 1.1 percent and the S&P 500 0.3 percent, while the Dow fell 0.5 percent, according to the Associated Press, after the Nasdaq’s 5.52 percent fall on November 5. The S&P 500 ended the week down 2.7 percent.
How did Japanese social media react to the AI stock selloff after the midterms?
In the small set of Japanese-language posts on X that we checked from November 4 and 5, 2026, one user doubted that Democrats could regulate data centers given Silicon Valley’s donations, one expected existing data centers to gain value, one said the two US parties cooperate in a real crisis, one called the hyperscaler rally ironic, and one pointed to state governors’ permitting power. They are not a measure of opinion in Japan.
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Reference Links
- Nasdaq posts biggest daily drop in 19 months on fears of AI regulations | Reuters (Investing.com)
- Democrats planning flood of AI bills when they take control of Congress | Reuters (StreetInsider)
- Trump’s midterm drubbing demonstrates the power of data center opponents | Reuters (Investing.com)
- Investors see risk from US midterms to AI trade as data center backlash builds | Reuters (Investing.com)
- Markets today: A wipeout for AI stocks sends Wall Street reeling | AP (BNN Bloomberg)
- US stock market close, November 6, 2026 | Associated Press
- US stock market report, November 6, 2026 (updated after the close) | Associated Press
- Employment Situation Summary, October 2026 | US Bureau of Labor Statistics
- Nvidia (NVDA) historical data | Investing.com
- Micron Technology (MU) historical data | Investing.com
- CoreWeave (CRWV) historical data | Investing.com
- Western Digital (WDC) historical data | Investing.com
- Voters rebuff data centers in every ballot measure except one during the 2026 midterms | CNBC
- Voters in ten states will vote on data center-related ballot measures November 3 | Ballotpedia News
- Hyperscalers and Apple surge after election results remove investor uncertainty | CNBC
- How the midterms could fuel the K-shaped AI trade | CNBC
- Phones ‘explode’ on Wall Street as ‘steamroller’ shows up for the AI trade | Reuters (Investing.com)
- Microsoft tightens oversight of neocloud data center projects, Bloomberg News reports | Reuters (Investing.com)
- Governor Abbott Directs TCEQ To Halt Data Center Permits | Office of the Texas Governor
- Gina Hinojosa won the governor’s race. What happens to Texas data centers now? | The Texas Tribune
- Alphabet tanks nearly 13% for worst day ever losing $500 billion value | CNBC
- ๆฅ็ตๅนณๅๅคงๅผใใ5ๆฅ็ถ่ฝใ3643ๅๅฎใฎ5ไธ7434ๅ (Nikkei 225 close, November 6) | Nikkei
- Kioxia Holdings (285A) stock quote | SBI Securities
- Seoul stocks crash for 2nd day on AI rout after U.S. midterms | Yonhap
- ๅฐ่ก่ท1873.08้ป (Taiwan stocks close, November 6) | Central News Agency via Economic Daily News
- Asia stocks tumble as AI rout batters Japan, S. Korea | Investing.com
- Australia Stock Market Index | Trading Economics
