AI-related companies now make up roughly half of the S&P 500, NPR editor says

Nam questions whether a data-center crackdown would help investors’ portfolios

A crackdown on the data centers that power artificial intelligence may be a winning political issue for Democrats, but NPR senior business editor Rafael Nam said he is “just not sure whether it would be such a good thing for our own stock portfolios.”

Nam laid out the stakes in an interview with NPR host Ailsa Chang two days after Democrats won the midterm elections overwhelmingly. AI-related companies now make up roughly half of the S&P 500, an index of the biggest companies in the United States, he said, and many average investors are invested in AI companies through 401(k)s and pension funds. If the AI trade gets hit, Nam said, the damage could reach well beyond big Wall Street traders to ordinary investors.

His assessment came on Nov. 5, when a big sell-off in AI shares sent the tech-heavy Nasdaq down more than 5% and wiped out more than $2 trillion in market value.

The Nasdaq Composite Index stood at 25,736.51 as of Nov. 5, according to FRED, the Federal Reserve Economic Data service maintained by the Federal Reserve Bank of St. Louis.

Nam traced the day’s selling to the prospect of a pushback on data centers, and described a dilemma at the center of the tension. Data centers are essential, he said, not only to AI companies but also to propping up the U.S. economy. Investors have plowed billions of dollars into AI companies such as Meta and Alphabet, the owner of Google, and those companies need to build the facilities to develop AI. If a crackdown on AI data centers comes not only in Congress but also in states, Nam said, it creates a real dilemma for investors, who may not see the returns they were hoping to get. “If we have pushback both at the state and the federal level, then it can slow down the progress of building out this technology and the infrastructure needed for this technology,” said David Busch, chief investment officer of Trajan Wealth.

A big theme of the election, Nam said, was that voters do not like AI data centers, which he said gobble up electricity and water resources, alongside broader fears that AI could replace jobs. Democrats got elected promising to do something about it, not only in Congress but also in states such as Texas, and Nam said they were very effective at channeling that anger. “There is some concern regarding AI regulation and fears that there could be far more regulations coming to AI technology, as well as a pushback on the build-out of data centers across the country,” Busch told NPR.

The sell-off itself closed out a whipsaw stretch for markets. Stocks had rallied one day earlier, Nam said, because investors going into the election had worried that contested races would leave the fate of Congress undecided, and the clean Democratic victories brought relief. He described the sell-off as “the hangover that followed,” and said the session was the worst day for markets since about “Liberation Day” in April last year, when President Trump announced sweeping tariffs.

It remains unclear whether the drop marks the start of a broader AI sell-off, Nam said. AI stocks have had a volatile year, he said, because investors are concerned about whether their investments in the technology will pay off. “We still don’t know if this is the start of the big AI sell-off,” Nam said.