As an analysis by Reuters underlines, the issue of data centers will now be one of those at the center of disputes. Those opposed to the proliferation of data centers could exploit the clear success of the Democrats in the midterm elections. Among other things, the resulting result could indicate a change in public opinion also regarding the topic of artificial intelligence and, according to investors, could slow down the boom that has driven economic growth and US stock markets.
Considering the elections for governor in Texas and Georgia, the Democratic candidates - who had based part of their electoral campaign on the request for a moratorium on the development of data centers - have revived positions that the party had not considered for some time.
According to investors, these victories would give more political weight to opponents of data center projects. Although considered the fulcrum of the artificial intelligence boom, for many they remain an unknown and are targeted because they are noisy and only function thanks to large quantities of water and electricity.
Shares of U.S. data center companies fell as Democratic success took shape. Among these, Core Scientific and Iren but other companies in the AI infrastructure sector such as Applied Digital, Hut 8 Corp and Cipher Digital also suffered declines.
One of the most significant changes expressed by voters occurred in Texas, a state that is estimated to host about a quarter of the expected US data center capacity by 2030.
Democrat Gina Hinojosa defeated Greg Abbott in the governor's race, ending three decades of Republican rule, while her fellow party member James Talarico was elected senator. Texas, a conservative state and large oil producer, has worked for years to transform itself into a technological hub, attracting companies such as SpaceX and entrepreneurs of the caliber of Elon Musk who, among other things, donated over 150 million dollars to Ken Paxton, the Republican representative defeated by Talarico himself. Here, therefore, the scenario may not yet be entirely clear also in reference to the fact that Republicans have recently started to oppose data centers considering that such facilities could increase public service bills, pollute the night sky with their lights and not generate a sufficient number of jobs or tax revenues to justify the incentives provided by the States.
In Georgia, which is the country's most dynamic market for data center construction, Democrat Keisha Lance Bottoms won the election for governor, putting an end to more than two decades of Republican control.
It remains to be closely understood what the full extent of the impact on the data center and artificial intelligence sector will be, noted HSBC analysts Max Kettner and Duncan Toms. “One possible – and entirely achievable – scenario is that we will not see blanket moratoriums on data centers, but rather more regulation and stricter oversight of them,” they said. “Another possibility is that the data centers simply move from Texas or where they are planned to other states.”
Morgan Stanley analysts then warned that Democrat Amy Acton's election as governor of Ohio could pose significant risk of delays to data center projects in that state, including a 10-gigawatt project involving Nvidia, Ohio's largest. Earlier this year, the state imposed a moratorium on processing new tax exemption requests for data centers.
Investors believe that the results of the midterm elections may now lead to stricter regulation, with possible repercussions on financial markets, where AI-related stocks have already recorded declines. And it also emerged that some major investments have already started to falter due to spending concerns and potential overcapacity.
“In our view, the significance of this midterm election should be interpreted more as a referendum on artificial intelligence than on Trump,” said Aidan Yao, senior investment strategist at the Amundi Investment Institute, the research center of Europe's largest asset manager.
“If the topic of artificial intelligence were to be subject to restrictions, the US economy, inflation and US monetary policy would become extremely uncertain,” he added. Also included in the general picture is the imminent IPO of Anthropic, which will shortly begin formally offering its shares to potential investors. An updated regulatory document, presented in recent days, showed a reduction in Anthropic's net loss in the third quarter, compared to a 47% increase in revenues compared to the previous quarter, which reached $16.96 billion. But, it turns out, the pace of growth has slowed down.
Continuing the theme, many analysts have noted that a slowdown in data center construction in the United States does not necessarily herald a change in demand for artificial intelligence or computing power. And some also view the Nasdaq's roughly 8% decline over the past month as a buying opportunity.
Tommaso Leodari, chief investment officer at Dubai-based hedge fund Index & Cie, said risks to data centers were difficult to predict, given their crucial role in the competition between the United States and China.
“I do not foresee restrictions, higher taxes or other opposition to what is the driving force of a new industrial revolution for the United States. I believe that the Democrats will continue to maintain a more moderate attitude than in the past. As a result, any hostility will be directed at Trump and his team, not at a new sector capable of saving American imperialism,” he declared.
Since Trump's return, the White House has decisively supported the expansion of artificial intelligence, also to win the technological race against China. But Trump, reports "La Repubblica", also obtained funding and personal wealth from this exchange with Silicon Valley. “It will be more difficult to advance his legislative agenda in the last two years of the president's term, while support for the AI boom will likely come under greater scrutiny,” some analysts confirmed. The concern is that the various companies such as Anthropic, OpenAi, Nvidia are unable to keep up with the stellar gains achieved in years of price increases. And they committed to investing astronomical sums, much of it with debt. A debt that could now be more expensive and difficult to place on the markets. "Investors could now expect greater caution on the development of data centers, especially in relation to energy consumption, authorizations, water use and impacts on local communities - other analysts have reported -. Even if the AI cycle remains intact, fears of longer authorization times or slower implementation could weigh on the entire ecosystem".
