Steve Weiss Says the Midterms Just Put a Lid on AI Spending. Here’s Who Could Get Hurt
Steve Weiss Says the Midterms Just Put a Lid on AI Spending. Here’s Who Could Get Hurt
Chris LangeThu, November 5, 2026 at 12:09 AM UTC
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Anggalih Prasetya / Shutterstock.com (Anggalih Prasetya / Shutterstock.com)Quick Read -
Vistra plunged 14% and Vertiv fell 13% as Democratic midterm wins raised fears of data center moratoriums, while NVIDIA slipped only 3%.
Morgan Stanley's Ariana Salvatore says a Republican-controlled Texas legislature would limit the scope for "some of the more ambitious changes."
Gordon Johnson argues Texas's new governor needn't pass a law, since Abbott's August pause on grid connections already freezes data center permits.
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Democrats' sweeping midterm wins sent a shock through the AI infrastructure trade on Wednesday, and Halftime Report regular Steve Weiss offered a blunt explanation on CNBC. "The market is seeing the Democratic victory as forced control on CapEx," Weiss said on November 4, 2026. He added that companies "won't be able to spend what they committed to spending if there's a moratorium on new data centers, particularly in Texas where 30% of all projects are," a figure Steve Weiss cited on air.
Why Texas Sits at the Center of the Selloff
Democrats took control of both chambers of Congress, and three newly elected governors campaigned on limiting data center development, according to Fortune. In Texas, Gina Hinojosa beat Gov. Greg Abbott after promising a moratorium on data center construction and an end to subsidies and tax breaks for major developers. Georgia's Keisha Lance Bottoms and Ohio's Amy Acton made similar assurances.
Local voters piled on. As of Wednesday afternoon, they had approved 37 ballot measures limiting data centers, CBS News reported, citing Redbud Consulting. GLJ Research's Gordon Johnson told CBS the Texas result could delay 13 gigawatts of planned data center power.
How Fewer Data Centers Squeeze AI Suppliers
Every new data center gets filled with chips and hooked up to power, cooling, and electrical gear. If fewer get built, those suppliers lose orders. Rob Sechan made the same point on the program: "If there's going to be less data center build-out, there's going to be pressure on the chips."
Wednesday's closing prices show where investors think the damage lands first:
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Daily Change
Vistra (NYSE:VST)
$120.29
-13.83%
Vertiv (NYSE:VRT)
$205.55
-12.89%
NVIDIA (NASDAQ:NVDA)
$200.13
-3.17%
Broadcom (NASDAQ:AVGO)
$325.48
-2.00%
Power and Cooling Names Took the Real Hit
That table shows a split. Vistra, a Texas-based power producer, and Vertiv, which sells power and cooling systems for data centers, each fell by double digits. NVIDIA and Broadcom slipped far less. That gap makes sense: chipmakers sell into data centers worldwide, so a project blocked in Texas can move to another state or country and still buy the same processors.
Power plants and grid contracts are tied to specific locations. A Texas permit freeze lands directly on a Texas power seller's growth plans. (The power, cooling, and grid names behind the expansion are the ones we profiled in a free report on seven AI infrastructure suppliers that aren't chipmakers.)
Vertiv traded in a wide range during the session. Shares opened at $217.165 and hit a low of $202.585, before closing at $205.55.
A Republican Legislature Could Blunt the Blow
Ariana Salvatore of Morgan Stanley (NYSE:MS) pushed back on the most dramatic reading. On the firm's Thoughts on the Market podcast the same day, she said, "In Texas, the incoming Democratic governor would still face a Republican controlled state legislature, limiting the scope for some of the more ambitious changes."
Johnson sees the opposite risk. Abbott himself halted new grid connection approvals for data centers in August pending an audit. "All the new governor has to do is keep it in place. She doesn't need a new law to keep data center permits frozen," Johnson told CBS. Both views can hold at once: a legislature can block new taxes and repeal of incentives, while an existing executive pause rolls forward.
What Retirement Investors in AI-Heavy Funds Should Track
Broad index funds carry large positions in chipmakers and the cloud providers funding the expansion, so a capex slowdown would reach 401(k) balances even for investors who never bought an AI stock directly. Key signals to watch:
Hinojosa's first moves: whether she continues Abbott's permit pause by executive action after taking office.
Georgia's executive order: Bottoms said she would sign one immediately to pause construction.
Hyperscaler capex guidance: whether cloud companies trim spending plans or shift projects to friendlier states on their next earnings calls.
Relative performance: if power and cooling names keep lagging chipmakers, the market is pricing a local slowdown. A broad chip selloff would point to a cut in total AI spending, which matters more for index holders.
Weiss framed Wednesday's drop as a cap on spending. The next few months of permits and guidance will show whether that cap holds or the money moves elsewhere.
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Source: “AOL Money”
