Global manufacturing, utility and mining companies have lost $4.2 billion since June as the AI “pick and shovel” trade reverses.
Companies more frequently linked in media coverage to data center construction have been hit hardest by the selloff, according to an FT analysis, as investor confidence in the AI boom falters.
The losses wiped out nearly half of the $9.4 billion in value the same companies gained over the previous 12 months, as investors rushed into the makers of everything from jet engines adapted to power hyperscale data centers to the advanced optical fibers needed to connect racks of AI servers.
Caterpillar, a leading supplier of data center gas generators, has seen its market capitalization reduced by $214 billion, or 44%, since its shares hit an all-time high on June 30, according to FactSet data.
Nuclear power company Oklo plunged 49 percent despite signing a contract with Meta in January. Comfort Systems, which makes HVAC systems, and Corning, a fiber optic maker, both lost about half their value during the same period.
Paul Kedrosky, a venture capitalist and fellow at the MIT Institute, said investors were wrong to start treating old-school industrial companies like semiconductor stocks. “In discussions with hedge funds and family offices, this idea that everything was now a growth stock had become endless – which is ridiculous, of course.”
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The selloff comes amid broader market turmoil for AI-related stocks, as investors wonder whether escalating debt-financed capital spending at hyperscalers and growing political opposition to data centers in the United States could lead to bankruptcy.
This has hit industrial groups whose fortunes are increasingly linked to growth. The sector is the second worst performer in the S&P 500 since the summer, after technology.
“A lot of institutional investment blindly piled into these deals, which probably fueled an overenthusiastic valuation of some of these (companies),” said Brett Ryan, senior U.S. economist at Deutsche Bank.
The stock market is “finally measuring up to what credit is already telling you” about the growth of risky financing for data center construction, he added.
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However, others argue that the companies behind the boom were on solid footing, with demand still far outstripping supply. Spending on building data centers – excluding computer equipment and chips – reached $96 billion in the United States in the 12 months to September, according to the latest government data.
“In terms of revenue fundamentals and earnings potential for these companies, we still see a very strong outlook,” said Alex Cordovil, an analyst at Dell’Oro Group.
Broader trends such as electrification and supply chain restructuring have continued to support the core businesses of many industrial companies. “Development is not slowing down yet…delays are at record levels, meaning that through 2027…revenue growth is already well entrenched,” he added.
Richard S Warzala, chief executive of Allient, a manufacturer of industrial controls, said demand for AI was not going to decline. “They can put a moratorium on the installation of new data centers, but those that have already started must be completed,” he said in a conference call on November 5.
Third quarter results showed strong demand. Many gas turbine makers reported taking billions of dollars in orders in the first nine months of 2026. Caterpillar reported a record order backlog of $78 billion and said its power generation sales rose 75% year over year, driven by data center demand.
Siemens’ order book for its electrical equipment from data centers grew 60% in 2026 to €7 billion, while Eaton, which also supplies electrical equipment, announced its orders had doubled year-on-year.
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Kedrosky warned that backlogs and orders were lagging indicators reflecting expectations, with people “doubling and tripling orders to protect their position in the queue given the perceived shortage.”
The impact of moratoriums and restrictions on data centers, widely supported by US voters in this month’s midterm elections, still remains unclear.
Citi researchers said in a note released after the election that while they expected tougher regulations to lead to more volatility in the data center sector, widespread restrictions on construction remained unlikely.
Constellation Energy’s Joseph Dominguez told investors that the market movement after the election was an “overreaction” and that Democrats “care very deeply” about protecting blue-collar data center jobs.
Others say any ban would only shift construction to more favorable jurisdictions.
“Ultimately, if there is demand for these things, they will be built somewhere,” Deutsche Bank’s Ryan said.
