Technology and semiconductor stocks slid after Democrats won control of both chambers of Congress on Nov. 4, as investors worried about tighter rules for data-center construction and AI and began reassessing exposure to Asian chip suppliers, Chinese and Indian stocks, and companies that could benefit from easing inflation and trade tensions.

The selloff was sharp: on Thursday, the S&P 500 fell 4.4%, the Nasdaq dropped 5.5% and the Philadelphia Semiconductor Index lost about 12%, leaving it roughly 38% below its June level, with losses continuing into Friday.

The market moves appear to reflect leverage and sentiment more than an imminent collapse in AI demand, though policy proposals and data-center impacts remain contested.

Underlying demand remains strong, with computing needs repeatedly exceeding planned capacity; at the end of the third quarter of 2026, cloud backlog stood at $561 billion and purchase commitments were around $924 billion.

AMD reported third-quarter 2026 revenue of $13.38 billion, up 44.7%, and non-GAAP earnings per share of $2.09; Data Center revenue nearly doubled to $8.55 billion, and the company forecast about $17 billion in fourth-quarter revenue.

Lisa Su’s expectation of more than 80% revenue growth in 2027 is a projection, not a reported result, and longer-term earnings estimates are less certain as data-center projects face higher costs and tighter financial constraints.

Morgan Stanley estimates that about 20% of U.S. data-center capacity planned for 2028—roughly 5 gigawatts of IT load—could shift to 2029, with capacity additions potentially falling about 4% in 2028 before rebounding about 38% the following year.

The bank sees regulation as more likely to delay some projects than derail AI investment, potentially extending the spending cycle and enabling a more gradual supply-and-demand balance; it maintains Overweight ratings on Amazon, Alphabet, Meta and Microsoft.

Morgan Stanley kept its combined capital-spending forecasts for major cloud and technology companies at about $1.6 trillion in 2027 and $1.8 trillion in 2028, while warning that delays and labor or materials shortages could push some spending later.

Equinix has about 700 megawatts of capacity under development, most of it expected to arrive in 2027–2028; the projects are substantially powered and permitted, supporting the company’s growth outlook.

Iren’s five-gigawatt near-term capacity pipeline, rising prices for new capacity and customer prepayments—including 90% upfront on a recent five-year contract—point to strong demand and financing flexibility.

Long-term agreements can help semiconductor companies protect margins during supply shortages and are likely to remain in place while supply is tight, barring an extreme economic shock or major default.