IREN (IREN.US) Data Center Delivery Delays Reduce Microsoft Capital Expenses! Stock prices were under pressure before financial reports, and AI infrastructure delivery risks attracted attention

The Zhitong Finance App learned that on Wednesday, IREN (IREN.US) attracted the attention of retail traders as cloud and AI stocks came under pressure after the Democratic Party won the midterm elections. The Australian data center company is also under scrutiny for a report that it led to a drop in Microsoft's AI capital spending last quarter.

IREN shares fell 2.5% in overnight trading after falling 11.4% during the regular trading session. Notably, IREN plans to announce its results for the first quarter of the fiscal year after the US stock market closes on Thursday. Analysts expect sales to drop 9% to $221.7 billion in the first quarter of the fiscal year, which will be the third consecutive quarter of negative sales growth. They expect an adjusted loss of $0.67 per share, which is far higher than the loss of $0.01 per share in the same period last year.

People familiar with the matter revealed that IREN experienced delays in the Childress data center project in Texas, causing Microsoft to delay spending originally scheduled for the September quarter.

Microsoft spent about $5 billion less on capital expenditure last quarter than planned because its anticipated leased data center capacity was not ready on time. Microsoft Chief Financial Officer Amy Hood said on an analyst call last week: “The capital expenditure was US$45.2 billion because we anticipated delays in the delivery of some third party capacity in the first quarter.”

One of the vendors involved was IREN, but it's unclear to what extent its delays contributed to this gap. Microsoft previously agreed to spend 9.7 billion US dollars over five years to rent IREN's Nvidia servers at the Childress data center in Texas. IREN originally planned to gradually bring these servers online during 2026, but has been facing delays.

Democrats control both houses: data center and AI regulation ushered in an inflection point

The dust settled in the midterm elections, and the Democratic Party won both houses of the Senate and the House of Representatives. For the ongoing wave of AI infrastructure, this may be a clear policy inflection point: a shift from “laissez-faire expansion” to “tightening supervision.”

In previous months, market resistance to data centers had continued to ferment at the local level. According to a Quinnipiac poll in September, 72% of voters opposed building data centers in the community, up 7 percentage points from March. Various parts of the US have set off a rare “wave of referendums”. More than 40 measures relating to data centers were voted on by voters in this midterm election, involving taxation, regulation, and even a complete ban. The city of Piqua, Ohio, even put “whether to remove the mayor who supports AI infrastructure” directly to the vote.

Today, this local “neighbor avoidance” is moving up the power ladder to Washington. Analysts generally expect that the Democratic Party, which controls both houses, will step up congressional scrutiny of large technology companies, AI security standards, and data center construction. Democratic Party chief member Warren of the Senate Banking Committee and other heavyweights have already spoken out intensively on data centers and AI issues, and related legislative action is expected to accelerate. What investors are most worried about is that this added layer of regulatory uncertainty will directly put the brakes on AI infrastructure.

The market's pricing has given the answer. On Wednesday, data center concept stocks fell sharply across the board: CoreWeave and Core Scientific each fell 10%, Nebius and Applied Digital each fell 7%, and overnight trading declined further. Behind the capital-intensive vote is the market's repricing of the “AI arms race deceleration.”

For hyperscale cloud vendors, this is just adding insult to injury. Microsoft has just cut capital expenditure of about 5 billion US dollars in the previous quarter due to delays in delivery of third-party data centers; if regulations tighten the approval process again, the already tight supply pace will face greater pressure. However, for second-tier data center developers such as IREN, which are highly dependent on a single customer and a single project, regulatory headwinds compounded project delays, and their risk exposure was further amplified.

The industry seems to have had a hunch for a long time. OpenAI was revealed to be pushing to change the name of the data center to an “AI computing park,” and is also allegedly planning to launch a large-scale policy and PR campaign immediately after the election in an attempt to “align” with the new legislators using a more moderate narrative to hedge against the upcoming regulatory pressure. This detail just confirms the industry's anxiety about policy changes.

Predictably, in the next few quarters, “data center approvals, AI safety legislation, and energy and water restrictions” will become three lingering clouds in the AI sector of US stocks. Among them, the tightening of energy and water permits may further increase data center construction costs and time delays.