A flash of anger from voters toward artificial intelligence infrastructure raised the bar for IPO candidates providing computing power to fuel the technology’s surging growth.

The Democratic sweep of Congress and a handful of governor races sent stock prices spiraling for so-called neoclouds. With contests swinging toward candidates promising tougher restrictions on building data centers and other infrastructure, investors and management teams are re-assessing the risk of increased cost and delayed timelines.

Slumps in shares of CoreWeave Inc. and Nebius Group NV on Wednesday were being closely watched by prospective investors in neoclouds such as Nscale Ltd. which is on file publicly with US regulators for an initial public offering.

Volatility also rippled across chipmakers like Nvidia Corp. and firms that power operations including GE Vernova Inc., ahead of potential debuts for temporary power systems provider Aggreko Inc. and SoftBank Group Corp.-backed AI infrastructure developer SB Energy Inc.

A spokesperson for Nscale declined to comment. Representatives for Aggreko and SB Energy didn’t immediately respond to requests for comment.

Investors pointed to Gina Hinojosa’s election as governor of Texas as an example of a shift where the more data center-skeptical candidate’s win changes the calculus.

“The hurdle is going to get higher to develop in these places,” said Greg Kuhl, global property equity portfolio manager at Janus Henderson. “Development will be more challenging, and we also think more experienced operators — public or private — with good balance sheets will be well placed to work with municipalities.”A critical distinction for Wall Street is whether companies within the data center ecosystem have access to computing-power capacity with projects that are already online, investors say.

“Names that already have compute are going to be the winners because there is going to be a question mark around any new data center buildings,” said Michael Alfaro, the chief investment officer of Gallo Partners, a long-short and event-driven hedge fund.

The election was the last major calendar event before Anthropic PBC’s expected kickoff of its formal IPO marketing next week. The highly-anticipated deal has continued to advance through the process, though the election could give some investors a reason to talk down valuation expectations.

Investors have told bankers on the IPO that their estimate of a fair valuation has shifted to around $1.4 trillion to $1.5 trillion, though a valuation of closer to $1.75 trillion is potentially achievable, Bloomberg News has reported.

Gallo Partners’ Alfaro sees Anthropic targeting a valuation between $1.3 trillion and $1.4 trillion needed “in order to build a quality book.”A spokesperson for Anthropic declined to comment.

The past month has been tough for some of the most prominent publicly-traded AI infrastructure stocks. CoreWeave is down 45% as of Wednesday’s close, while Nebius has wiped out 39% of its value. Performance has been better for data center REITs, with Equinix Inc. up 3% while Digital Realty Trust Inc. shares have climbed 2.8%.

“The reality is IPOs are priced relative to the existing companies in the market and those comps, in a lot of cases, have gotten cheaper, so that’s already in the mix,” Kuhl said.