Blue Wave and AI Stocks: What the Midterms Mean

Could the blue wave sink AI stocks? Since the midterms, it is the question in every market that touches AI. Kunkafa answers market questions in one way: not with a yes or a no, but with how far a market could move, in which direction, within what duration, and how confident Kunkafa is about each path.

So we did what Kunkafa does with prices. We read the numbers: the election results, what the winners promised about data centres, how far AI and chip stocks have fallen, the debt behind the build-out, and the filings of SoftBank, the clearest example.

1. What the Democrats won, and what they said about data centres

The Democrats took the House and the Senate on 3 November, and both were called before midnight Eastern (Latitude Media). Data centres were on the ballot in plain sight:

• Next door. Almost 80% of voters in an NBC exit poll opposed a data centre in their own neighbourhood.
• At the ballot box. Almost 60% called data centres a crucial or major factor in how they voted (TechCrunch).
• Locally. Of 41 local measures on data centres in 10 states, voters rebuffed the industry in all but one (Fortune).

The bigger change is in the states, where data centres get their land, permits and power:

• Texas, the industry’s second-largest US market: Governor-elect Gina Hinojosa wants a moratorium on new construction until the state passes stronger local protections.
• Wisconsin: David Crowley wants a pause during a statewide review, and developers to pay for every grid upgrade. The state hosts about 30 projects, including the nearly one-gigawatt Project Lighthouse, part of the Stargate programme run by Oracle and OpenAI.
• Ohio: Amy Acton backs a “conditional” moratorium until data centres cover all of their energy costs.
• Georgia: Keisha Lance Bottoms has called for a year-long ban.

In Washington, the nationwide moratorium bill from Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez now has better odds (bill record). It still faces a presidential veto, and one advocate told TechCrunch that “even among Democrats, a blanket freeze is contested.”

There is no national ban, and no law has changed yet. What has changed is the pace: permits, power connections and tax breaks now run through people who campaigned against them. Futurum Group estimates that a third of the US data-centre capacity planned for 2027 and 2028 sits in states where governors may now slow it down (Reuters).

2. How far AI and chip stocks have fallen from their highs

The sell-off did not start on election night. The result turned a month of doubt into a rout. This is where each stock closed on 5 November, against its highest price of the past year.

Source: Yahoo Finance quote pages, read on 6 November 2026. The high is the highest traded price of the past 52 weeks; the close is the 5 November close. SoftBank fell another 10.8% on 6 November, to ¥3,549.

Three things stand out:

• Leverage magnifies everything. SOXL and KORU aim for three times an index’s daily move. The chip index is 39% below its high, SOXL 86%. The way up was just as steep.
• Memory chips rose the most, then fell the most. Micron and SK Hynix are still well up on the year, even after halving from their peaks.
• The borrowers fell furthest. CoreWeave, Nebius, Oracle and SoftBank, the companies with the heaviest debt for data centres, sit 54% to 68% below their highs. NVIDIA, which sells the chips and is paid in cash, is 25% below.

3. Why a slowdown hurts a borrower more than an owner

A data centre paid for with cash can wait. A data centre paid for with debt cannot. The chain runs like this:

1. A permit or a power connection arrives late.
2. The building opens late, so rent from AI tenants starts late.
3. The interest bill starts on time.
4. Lenders and investors mark the project down, or ask for more collateral.
5. The owner needs cash just as selling assets gets harder.

That is why markets moved before any law did. On 5 November the Nasdaq 100 fell 6.3%, erasing $2.3 trillion, and the chip index fell 12% (Yahoo Finance). On the morning of 6 November the chip index was up 6.7%. Both directions stay possible, even in a week like this one.

4. SoftBank: the most borrowed bet on the boom

SoftBank Group (Tokyo: 9984) is the market’s favourite way to own the AI build-out: $64.6bn invested in OpenAI for about 13%, around 90% of the chip designer Arm, and a sponsor’s role in Stargate, the programme to build OpenAI’s data centres (SoftBank). Much of it was paid for with borrowed money.

What SoftBank’s own filings show, from the June quarter, the latest full report (the next results are due on 10 November):

• Holdings against debt. ¥83.11 trillion of holdings against ¥10.81 trillion of adjusted net debt, a loan-to-value of 13% (SoftBank NAV). Arm alone was about 60% of those holdings.
• Cash. The quarter’s operating cash flow was negative at −¥0.44 trillion, and interest paid in cash was ¥339bn (quarterly report).
• New loans. A $25bn loan backed by Arm shares, a $10bn loan tied to OpenAI’s shares that the parent company guarantees, and an $11.9bn term loan (offering memorandum).
• New bonds. $10bn issued in September at 8.6% to 9.75% a year (bond terms).

Two details matter for the election question. The Arm and OpenAI loans can demand cash if those shares lose value, so a slower build-out that hits OpenAI’s valuation could reach SoftBank’s cash, not only its paper wealth. And the debt came before the vote: the election did not create SoftBank’s exposure, it raised the odds that the exposure gets tested.

5. So how likely is SoftBank to go down?

“Going down” means two different things.

The shares. They already have. SoftBank closed at ¥3,549 on 6 November, down 10.8% in a day and 61% below its high. Arm, its largest holding, closed at $166.72 on 5 November, against $354.57 at the end of June.

A default. The debt market’s price for that is the credit default swap, insurance against SoftBank failing to pay. It reached 466 basis points on 6 November, the highest since October 2022, and the data provider’s own reading put the implied chance of default within five years at 30.6% (Reuters).

That number is not Kunkafa’s, and it is not a measured chance. It is a price: it includes what investors are paid to carry the fear, and an assumption about how much lenders would get back. It is a warning, not a verdict.

We tested what has to break, using SoftBank’s June figures and its own aim of keeping loan-to-value below 25%, with 35% as the ceiling in extraordinary times:

Kunkafa’s calculation from SoftBank’s June holdings and adjusted net debt. Everything else is held at its June value, so this is a stress test, not today’s balance sheet.

In that last step SoftBank would need to sell about ¥2.5 trillion of assets to get back to 25%. Even then it owns more than it owes. The danger is not the balance sheet turning negative. It is a cash call arriving while buyers for its assets are scarce, and that needs four things at once: a lasting fall in Arm, a hit to OpenAI’s value, delays that cost real cash, and lenders who refuse to roll over the debt.

Our reading: a weak share price is likely while the policy fog lasts. A default needs all four links to break together, and SoftBank still holds assets that markets can price and buy. The next numbers arrive on 10 November.

6. Where the cracks could show first

SoftBank is the famous name. The weaker links are smaller, newer and more borrowed: the “neoclouds” that rent out AI chips.

Sources: Motley Fool, 24/7 Wall St., Yahoo Finance.

The pattern is simple. Builders that pay from their own cash can absorb a slower year: Microsoft, Alphabet and the other giants in our AI bubble investigation. Builders that pay with expensive debt, on contracts that start paying only when the building opens, have less room. Elon Musk warned in October that up to 200 neoclouds could collapse (Invezz). That is a claim, not a count, but it shows where the market is looking.

A crack does not start in a court. It starts when a borrower asks for more time, more money or a lower price, and the answer is no.

7. The other side

• Demand is real. Arm’s September-quarter revenue grew 27% (Arm).
• Paying is an option. Most of the new rules ask data centres to pay for their own power, not to stop building.
• A slower build-out cuts both ways. It can raise the value of buildings that are already powered and leased.
• Washington is divided. The new Congress sits in January, and the White House can veto.
• Rebounds happen. The chip index bounced 6.7% the morning after the rout.

8. What Kunkafa’s record shows on AI and chip markets

No one knows for sure how this ends, and Kunkafa does not claim to. Kunkafa does not cover SoftBank, so we do not invent a number for it. Kunkafa does cover the AI and chip markets around it: Kunkafa puts a confidence on possible moves in both directions, for every duration, and counts how each one turned out.

From late August to 2 November, before the election, Kunkafa’s published reports counted every forecast at Kunkafa’s confidence of 95% and above whose duration had ended, with durations from five minutes to 50 days. Each is measured by how far price travelled toward its level within its own duration.

CoreWeave, where the debt fears sit, from 11 September to 2 November: 141,796 forecasts, 78,252 on rises and 63,544 on falls.

CoreWeave swings hard, and the record shows it at both ends: more of its forecasts went three times past their level, and more fell short of a quarter of the way, than in any other market here. The full CoreWeave report has every band by direction and duration.

The other AI and chip markets, in the same view:

100% means price reached the level. It is a distance, not an investment return. The forecasts that fell short are in the same rows. Each market’s name opens its full report, how to read forecast results explains each band, and the Track record has every market Kunkafa covers. The election week falls in the next reports.

9. Where Kunkafa stops

Kunkafa does not forecast elections, laws or defaults, and does not publish a SoftBank market. For the markets Kunkafa covers, Kunkafa answers one question: how far could this market move, in which direction, and how confident is Kunkafa about each outcome, across every duration at once.

10. Six questions to ask before the next headline

• Is it a ban, or a bill for power? A pause stops revenue; a power charge only trims it.
• Who pays the interest while the building waits? Cash payers can wait; borrowers pay.
• What is the debt secured on? Loans backed by shares can call for cash when the shares fall.
• What is due by 2027? Near maturities are where a bad year turns into a crisis.
• Is the share price falling, or the ability to pay? They are different events.
• What does the other direction look like? A fall is only half the picture. Both outcomes stay possible.

Elections are argued in headlines. Moves can be measured. Create a Kunkafa account and read CoreWeave, NVIDIA, Micron and Semiconductor Bull 3X in both directions, beside their record.

Figures from SoftBank Group filings and notices, Reuters, Yahoo Finance, Latitude Media, TechCrunch, Fortune, Motley Fool and Kunkafa’s published reports of 2 November, checked on 6 November 2026.