Here's a thing that happened while everyone was busy arguing about GPUs: the data center became a ballot-box issue. And the data center lost.

Voter opposition to data center development across 10 states, combined with Democrats' midterm gains, has raised concerns about tighter regulatory oversight. Markets being markets, that concern showed up immediately in the stock prices of just about anything connected to AI infrastructure.

Data Center Opposition Gains Political Momentum

Data center opponents emerged among the biggest beneficiaries of Democrats' sweeping victories in the November midterm elections, as voters across 10 states backed restrictions or rejected proposals to develop data centers in their communities, Reuters reported last week.

The numbers are striking. According to Redbud Consulting tracking, 40 of the 41 data center-related ballot measures sought to restrict their establishment. That's not a mixed bag. That's a near-unanimous theme on the ballot.

And in a majority of counties where these measures appeared on ballots, voters also shifted toward Democratic candidates in Senate races compared with the 2024 elections. So the data center question and the partisan shift moved together.

The results could signal growing political pressure on the technology industry, with a Democrat-led Congress potentially pursuing tighter oversight of data center development.

Nvidia, CoreWeave and AI Stocks Slide After Midterms

The political backlash has also weighed on investor sentiment toward companies exposed to AI and data center infrastructure.

According to Reuters data sourced from LSEG, shares of Nebius Group (NBIS), IREN Ltd (IREN), CoreWeave (CRWV) and Applied Digital (APLD) plunged approximately 27% to 31% between Oct. 30 and Nov. 5.

Nvidia Corp. (NVDA) shares fell about 16% over the same period, while Alphabet Inc. (GOOGL) shares, Google's parent company, remained relatively flat.

The declines in these infrastructure-focused stocks significantly exceeded the Nasdaq Composite's roughly 8% drop. When the index falls 8% and your stock falls 30%, the market is telling you something specific about your business, not just about the macro weather.

The pain looks even starker over a longer window. Over the past month, Nebius shares have fallen 26.26%, IREN has declined 40.11%, CoreWeave has dropped 24.28% and Applied Digital has shed 22.97%. Nvidia shares are also down 23.24% over the same period.

Tougher Data Center Regulations Threaten AI Infrastructure Spending

Investors are increasingly concerned that tougher regulations could complicate data center construction, increase infrastructure costs and delay expansion plans.

Such restrictions could also threaten the massive investments underpinning the AI boom, potentially affecting demand for GPUs, servers and other computing infrastructure. Follow the logic: no new data centers means fewer places to put the chips, which eventually means less reason to buy the chips.

The companies themselves are not blinking. Earlier, OpenAI CFO Sarah Friar said the company remains committed to investing heavily in AI infrastructure despite mounting public opposition to data centers and voters' rejection of new developments in the midterm elections.

Meanwhile, CoreWeave CEO Michael Intrator said the political shifts following the midterms would not derail the company's AI data center expansion plans.

Whether the ballot box or the boardroom wins that argument is now one of the more interesting questions in the AI trade. For now, investors have cast their own vote, and it looks a lot like selling.