Nasdaq fell 5.5% on a Texas data center freeze Abbott already ordered

Thursday's chip rout priced a Texas data center freeze. Greg Abbott ordered it in August. The vote moves its end date; the $1.3B tax break needs the Senate.

The Editors · Markets · 9 min read · Nov 6, 2026

Aerial view of the Texas State Capitol in Austin, its pink granite dome under a blue sky — Photo: LoneStarMike(opens in a new tab), CC BY 3.0(opens in a new tab), via Wikimedia Commons

By the numbers

5.52%Nasdaq Composite drop on November 5, led by chip and data center stocks

Aug 3the day Greg Abbott froze Texas data center grid connections pending an audit

474 GWpower requested in ERCOT's large-load queue, about 90% of it from data centers

19 to 12Republican majority in the Texas Senate, which any repeal of the $1.3B data center tax break must pass

The Nasdaq Composite fell 5.52% to 24,315 on November 5, and the reason most desks gave was Tuesday's election: Democrats who campaigned on stopping data center construction won the governor's races in Texas and Georgia. Chip stocks took the worst of it. Micron, AMD and SanDisk each lost 17% or more in a day.

In Texas, the stop is already in place. A Republican ordered it. On August 3, Gov. Greg Abbott told the Public Utility Commission and ERCOT to audit every data center in the grid's connection queue before any of them moved forward. On September 21 he told the state's environmental agency to halt all permits sought by data centers until that audit is done.

What the election changes in Texas comes down to two things: how long the freeze lasts, and whether the state keeps paying for the boom through its sales tax. Governor-elect Gina Hinojosa controls the first. The second runs through a state Senate that Republicans still hold 19 to 12.

What fell on November 5

The data first. The S&P 500 lost 4.36% to 7,353.73 and the Dow gave back 1,833 points, erasing the gain it made the day after the vote. The VIX, Wall Street's gauge of expected swings, jumped 69.66% to 28.18, its highest close since March 30.

The selling was narrow at the top. Per Thursday's closing tallies, the VanEck Semiconductor ETF fell 11.21%, Nvidia 9.26% and Broadcom 10.43%. The companies that build and power data centers fell with them: CoreWeave 9.83%, IREN 16.95%, GE Vernova 7.48%, Vistra 6.15%. Investors moved into bonds, and the 10-year Treasury yield fell to 4.84%.

Two causes were cited side by side: weak chip earnings, and the fear that Democratic wins in Texas and Georgia could slow data-center permitting and power approvals. This piece looks at the second one. Nobody can split a single day's drop between the two, and we won't pretend to.

The Texas pause started in August, under Abbott

Abbott's August 3 directive did more than ask questions. It stopped data centers from advancing through ERCOT's connection process until the state checked their finances, power use, water use, community impact and ownership. The audit covers about 300 data centers of 75 megawatts or more, and its report is due December 10.

The September 21 order widened it. The Texas Commission on Environmental Quality was told to halt all permits sought by data centers, and the governor's release set the bar for getting out: a project has to cover all its electrical infrastructure costs, lead to lower residential power bills, leave local water needs alone and meet setbacks from nearby homes. Law firms reading the order noted it reaches even facilities that make their own power off the grid.

Then ERCOT added a delay of its own. The grid operator's study of the first batch of large loads was due April 9, 2027. "We will not have the study done by April 9, 2027," ERCOT senior vice president Chad Seely told regulators.

Put those together. A data center waiting in the Texas queue on Monday, November 2, was already held by a Republican audit, a permit halt with no fixed end date and a grid study that ERCOT itself says will run late. All of that was public before a single vote was counted.

What Hinojosa can do alone, and what she can't

Hinojosa has been direct about the order she plans to sign. "When I am governor I will issue a moratorium, a ban, on all data center approvals until laws can be passed by the Legislature to protect Texans," she said on October 22, per the Texas Tribune. She takes office January 19, 2027. Keeping Abbott's permit halt alive takes nothing more than her signature.

The money is a different matter. Texas exempts qualifying data centers from its 6.25% sales tax on servers and equipment, and state officials said in April that the break would cost at least $1.3 billion in 2026, up from about $150 million a year in 2023 and 2024. That exemption is in statute. Repealing it takes a bill through both chambers.

Democrats are projected to hold 83 of the 150 House seats. In the Senate, Republicans keep 19 of 31. The new lieutenant governor, Democrat Vikki Goodwin, will preside over that Senate, but she does not have the votes in it.

Our read: the market treated a governor's promise as if it came with a legislature. In Texas it comes with half of one.

The real change is the end date

Here is where the election does move something. The ERCOT audit is due December 10, while Abbott is still governor. Abbott ordered the pause, so he could lift it once the report lands, in the five weeks before he leaves office. Hinojosa says she won't lift it. She wants it held until the Legislature acts, and the regular session runs from January 12 to the end of May 2027.

So the measurable Texas effect of Tuesday's vote is a pause that likely runs through spring 2027 or later, where before it had a plausible exit around the turn of the year. That is months of delay for projects already waiting on a late grid study. It is a cost. It is smaller than "Texas bans data centers."

The stakes are still large, because Texas is where the buildout is. Wells Fargo estimates the state holds about 27% of planned US data center gigawatts, and ERCOT's large-load queue has reached 474 GW of requests, roughly 90% from data centers, more than five times the grid's record peak demand.

27%7%5%5%

View as table

Share of planned US data center gigawatts
label	Share of planned US data center gigawatts
Texas	27%
Georgia	7%
Ohio	5%
Pennsylvania	5%

Source: Wells Fargo estimate via CNBC, November 4, 2026

A queue that size is mostly requests that will never be built. In September, before Abbott's permit halt, SemiAnalysis counted only 2.3 GW of US capacity delayed in practice by moratoriums, against 38 GW of new IT capacity expected in 2027, 22 GW of it already under construction. A project that is already built or rising is past the permits a pause blocks. The pause bites hardest on projects still on paper.

Georgia is the newer risk

Georgia is different, because there is no pause there yet. Governor-elect Keisha Lance Bottoms promised a temporary statewide pause on new data center construction to study its effect on power bills, communities and the environment. Georgia holds about 7% of planned US data center gigawatts, per the same Wells Fargo estimate, and she will likely face a Republican majority in at least one chamber. Of the two states, Georgia is where Thursday's fear is newest, and it carries a quarter of Texas's weight.

What would prove this wrong

Three things would make the sell-off look right.

An order that reaches back. Analysts note a Texas governor can dismiss approvals already granted. A pause holds new projects. Cancelling approved ones would hit capacity counted in 2027 and 2028 forecasts.
Senate Republicans voting for repeal. Abbott, a Republican, set the "cover your own grid costs" condition himself. If enough Republican senators back ending the $1.3 billion exemption, the tax side moves too.
Washington. Democrats now control both chambers of Congress. Dan Ives of Yorkville told CNBC that a Democratic Senate "will create some major hurdles for AI and tech legislation" over the next two years. That risk is federal, and nothing in Texas law changes it.

Who this is for: anyone holding chip or AI infrastructure funds who read Thursday as a new ban. The Texas part of that ban is three months old. Our earlier pieces on CoreWeave's 15% debt and Broadcom's $42 billion in AI lending show how much of this trade runs on borrowed money and long schedules. A longer pause stretches those schedules.

What to watch next

December 10: ERCOT's audit report to the Public Utility Commission.
Before January 19: whether Abbott lifts his own permit halt on the way out.
January 12: the Legislature convenes; watch for bills on the sales-tax exemption in the House and how the Senate's 19 Republicans answer them.
The first Hinojosa order: whether it holds new approvals only, or reaches approvals already granted.