Democrats Won Congress; Chip Stocks Fell Overnight, Then Recovered

On election night, the selling went straight for AI stocks. Nasdaq 100 futures fell as much as 2.4% overnight, and S&P 500 futures dropped up to 1.4%. By 3:13 a.m. ET, Nasdaq 100 futures were up 0.26%.

Asia went through the same swing on a larger scale. South Korea's KOSPI fell 6.97% from its intraday high, then closed the day up 0.62%. Foreign investors were net sellers of $1.7B in Seoul.

What these numbers share is a sharp overnight sell-off that was mostly reversed by morning. Why the selling started and why it stopped are two separate questions.

Where Democrats Won

According to AP, Democrats reached at least 51 Senate seats and took the majority. They flipped seats in Texas, Ohio, Kansas, North Carolina and South Carolina. AP and Investing.com also reported Democrats winning the House.

Post-election analyses tied the wave to the cost of living, fuel prices and rising electricity bills. In several races, opposition to new data centers was also a deciding factor.

In Texas, Democratic candidate Gina Hinojosa said on October 15 that she would impose a moratorium on new data centers and approvals. AP reported that Greg Abbott conceded. Investing.com says Texas and Georgia account for a third of AI data center spending, and Democrats won both governor's races.

In premarket trading, CoreWeave fell as much as 3.2% and Applied Digital as much as 3%. Oracle gave back part of the previous day's 5.85% gain with a 1.2% decline. A note from Evercore ISI's Amit Daryanani had called the direction in advance: "We think the initial reaction will be to sell AI names."

The chart below shows the past month of the fund that tracks the Nasdaq 100. Before the election, Goldman Sachs's broad AI basket had lost 15% in October and sat 24% below its peak.

Why a Congressional Majority Is Not Enough

In the first hours, the market read the election as a Washington story. By morning, it had started reading the same result as a state story.

Every bill Congress passes needs Trump's signature until January 2029. The Democratic majority is enough to set the agenda, but not enough to pass laws on its own.

Stephen Brown of Capital Economics reached the same conclusion: Democrats lack a filibuster-proof Senate majority, so the near-term policy outlook changes little. The binding tools sit with the states.

In July, New York Governor Kathy Hochul imposed a one-year pause on permits for new data centers above 50 megawatts. According to Ballotpedia, it was the first state-level moratorium, and it came through an executive order.

On November 3, voters in 10 states faced 41 local data center questions, and 28 of them aimed to restrict construction. In all six earlier 2026 votes, voters sided with tighter limits. Data Center Watch says 45 projects worth $68B were disrupted by local opposition in the second quarter alone.

Seoul Sold Chips and Bought Batteries

The KOSPI opened up 2.43% at 5,786 and slid to 5,421.72 in the afternoon. It closed at 5,683.80. The real move happened inside the index.

Battery makers rose on expectations that Democrats will reinforce the clean energy incentives in the Inflation Reduction Act. Kim Dae-joon of Korea Investment & Securities said the selling was not indiscriminate but a sector rotation driven by policy change.

In Tokyo, SoftBank Group fell 3.2% and the Nikkei lost 1.4%. The dollar slipped to 158.13 yen from 158.69; Nomura sees this outcome as negative for the dollar and positive for Treasuries.

What It Means for Investors

• The market priced in a Democratic majority but not a federal data center restriction; the futures' return to positive territory shows this.
• The risk is greatest for companies whose growth depends on new site approvals: CoreWeave, Applied Digital and Nebius were sold first overnight.
• The date to watch is January 2027: if Texas's new governor turns the moratorium pledge into an order, the timing risk becomes concrete.
• The risk that would break this thesis is Georgia following Texas; a third of AI data center investment would then wait on approvals.

Masthead: Election results rely on AP projections and reporting by PBS and Al Jazeera. Futures and stock moves come from Investing.com, Reuters and AP. KOSPI data is Korea Exchange data as reported by Seoul Economic Daily. Local ballot counts come from Ballotpedia, and Hinojosa's pledge from the Washington Examiner. The dollar figure for foreign selling in Korea is the source's own conversion.