The U.S. stock market turned upside down overnight! The Democrats swept Congress, and is clean energy about to take off? But this sector got hit the hardest...
The neocloud sector took a beating. Hut 8 plunged nearly 23%, CoreWeave fell about 10%, Core Scientific and IREN dropped more than 10%, and Nvidia also shed over 3%.
The power sector fared just as badly: GE Vernova fell about 11%, Vistra plunged more than 12%, and Constellation dropped around 9%.
What was behind the sell-off? Texas! Texas Democrat Gina Hinojosa won with about 52.8% of the vote, becoming the state’s first Democratic governor in more than 30 years. Her key promise is to immediately pause approvals for new data centers.
Goldman Sachs estimates that this “blue wave” could affect about 45% of data center expansion capacity nationwide, with Texas accounting for roughly 25%. Around 13 GW is directly affected. And when data center projects are put on hold, the power sector gets hit too.
So if neocloud is in trouble, who benefits? Traditional cloud providers, of course. Microsoft rose 6.7%, Amazon gained 6.1%, and Google surged 4%. The combined market cap of the five giants jumped by nearly a trillion dollars in a single day! The Google shares we bought on the dip last week are taking off~
The logic behind the rally is pretty straightforward: slower new construction makes existing computing capacity scarcer, benefiting the big players that already have large-scale infrastructure in place. And as costs rise, they may also cut capital spending, potentially boosting free cash flow.
Meanwhile, sectors backed by the Democrats, such as clean energy and health care, are also starting to soar. And it looks like the impact may extend beyond the midterms—the Democrats could also have the edge in the general election two years from now. Everyone will have their own view, so plan accordingly.
And lastly, don’t forget to follow me! I share the latest U.S. market updates every day~
The neocloud sector took a beating. Hut 8 plunged nearly 23%, CoreWeave fell about 10%, Core Scientific and IREN dropped more than 10%, and Nvidia also shed over 3%.
The power sector fared just as badly: GE Vernova fell about 11%, Vistra plunged more than 12%, and Constellation dropped around 9%.
What was behind the sell-off? Texas! Texas Democrat Gina Hinojosa won with about 52.8% of the vote, becoming the state’s first Democratic governor in more than 30 years. Her key promise is to immediately pause approvals for new data centers.
Goldman Sachs estimates that this “blue wave” could affect about 45% of data center expansion capacity nationwide, with Texas accounting for roughly 25%. Around 13 GW is directly affected. And when data center projects are put on hold, the power sector gets hit too.
So if neocloud is in trouble, who benefits? Traditional cloud providers, of course. Microsoft rose 6.7%, Amazon gained 6.1%, and Google surged 4%. The combined market cap of the five giants jumped by nearly a trillion dollars in a single day! The Google shares we bought on the dip last week are taking off~
The logic behind the rally is pretty straightforward: slower new construction makes existing computing capacity scarcer, benefiting the big players that already have large-scale infrastructure in place. And as costs rise, they may also cut capital spending, potentially boosting free cash flow.
Meanwhile, sectors backed by the Democrats, such as clean energy and health care, are also starting to soar. And it looks like the impact may extend beyond the midterms—the Democrats could also have the edge in the general election two years from now. Everyone will have their own view, so plan accordingly.
And lastly, don’t forget to follow me! I share the latest U.S. market updates every day~
