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CoreWeave stock falls 10% as voters in 10 states rebuke data centers
Microsoft and Amazon rose more than 6% after the midterms while CoreWeave dropped, and a JPMorgan analyst gives the reason.
A rebuke at the ballot box
CoreWeave stock plunged around 10% after the midterms, while Microsoft and Amazon each surged more than 6%. [1] The split follows Tuesday's vote, in which voters across at least 10 states delivered a sweeping rebuke to data center expansion. [2]
Voters backed restrictions or rejected pro-development measures in all but one of 41 local ballot measures across 10 states, according to an analysis by Ballotpedia and results compiled by CNBC. [2] According to The Washington Post, voters in at least 38 jurisdictions passed measures limiting or blocking data centers. [2]
Ohio and North Dakota results
In the City of Defiance, Ohio, voters approved a charter amendment restricting data center construction by a 64.73% to 35.27% margin, per unofficial county results. [2] Voters in Pataskala, Ohio approved a data center-related charter amendment by 73.62% to 26.38%. [2] Granville, Ohio backed a similar amendment, 82.45% to 17.55%. [2]
In Ashville, voters rejected a data center referendum, with 81.61% voting against and 18.39% in favor. [2] In Harwood, North Dakota, roughly three-quarters of voters rejected proposed restrictions on industrial development, according to The Washington Post. [2]
Why voters pushed back
The rejection came amid growing concerns about electricity costs, land use and the rapid buildout of AI infrastructure. [2] Communities increasingly weigh the economic benefits of new data center development against concerns about higher utility bills, water consumption, noise and local control. [2] Industry representatives argue that data center investment can provide substantial economic benefits to the communities hosting the facilities. [2]
A pre-election Washington Post-ABC News-Ipsos poll found that seven in 10 Americans, including a majority of Republicans, opposed new data center construction in their communities. [2]
An election-day poll showed 56% of voters considered AI and data centers a major or crucial factor in their vote. [2] The issue still ranked last among five issues surveyed, behind concerns including government corruption, the war in Iran and the cost of living. [2]
Governors' races and projects already stalled
In Texas, Democrat Gina Hinojosa defeated Republican Gov. Greg Abbott after campaigning on a proposed moratorium on new data center projects and tougher protections for the environment and electricity ratepayers. [2] She has proposed a statewide moratorium on new data center permits, with projects already under construction reportedly exempt. [1]
Ohio elected Democrat Amy Acton as governor, and she supports a data center moratorium and stricter regulations. [2] Georgia Gov.-elect Keisha Lance Bottoms made greater accountability for data center developers a central part of her campaign. [2]
More than 145 data center projects were delayed or canceled nationwide through early August, according to S&P Global figures cited by The Washington Post. [2] The Washington Post reported that public opposition accounted for the vast majority of those delays and cancellations. [2]
Why CoreWeave fell while Microsoft and Amazon rose
JPMorgan's James Sullivan said the split in equity performance is largely driven by the view that existing capacity is significantly more valuable because of incremental supply constraints. [1] He said borrowing spreads have widened significantly for neocloud companies, leaving their cost of additional capital substantially higher than that of hyperscalers. [1]
Nomura said Democratic gubernatorial wins could slow new data center development through tighter permitting and regulation. [1] Much of the data center capacity expected to come online in 2027 is already under construction, limiting the near-term impact of new restrictions. [1] Nomura said tighter construction regulations could become a more significant headwind to AI investment from 2028. [1]
OpenAI's response
OpenAI said it would pay the full cost of powering data centers it owns and operates, solicit community input, publish construction plans and avoid using nondisclosure agreements with public officials. [2] It released a policy blueprint encouraging lawmakers to adopt similar standards. [2] The blueprint had been in development since August and built on earlier company pledges to protect ratepayers and address community concerns. [2]
OpenAI has targeted hundreds of billions of dollars in computing infrastructure spending by 2030. [2]
What this means for you
If you hold CoreWeave shares, the post-election drop was around 10%, while Microsoft and Amazon each rose more than 6%. [1] JPMorgan's Sullivan tied that gap to neocloud borrowing spreads that have widened significantly. [1]
If you live near a proposed site, local ballots are where several of these decisions were made, with measures passing in at least 38 jurisdictions. [2] Utility bills, water consumption, noise and local control are the concerns communities weigh against the economic benefits. [2]
For the timeline, capacity expected in 2027 is largely under construction, and Nomura points to 2028 as when tighter rules could weigh more on AI investment. [1]
Sources
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