Democratic election victories in the US create risks for building AI data centers

Elections reshape the regulatory landscape for AI infrastructure

The Democratic Party's decisive victories in US elections call into question the prospects of energy-hungry data centers in key states and could slow the AI rollout that has underpinned Wall Street for the past four years. This is reported by AFP. Even before US markets opened, AI company shares were under pressure, including Elon Musk's SpaceX, while in Asia chipmaker stocks were falling, including Samsung in South Korea.

Texas — the main test for AI infrastructure

The central storyline of the campaign was Texas, where both the governorship and Senate seats were won by candidates advocating stricter regulation of data centers. Democratic governor Gina Ortiz Jones — no, Gina Hinojosa — had already demanded during the campaign an 'immediate moratorium on data centers' until the legislature takes real measures to protect residents, and also called for scrapping tax breaks for the industry — a demand shared by new senator James Talarico. Outgoing Republican governor Greg Abbott wanted to turn Texas into the 'nerve center' of AI, but amid growing public discontent he noticeably adjusted his position. Analysts called the result in deeply conservative Texas a decisive test for the future of AI infrastructure: thanks to cheap energy and favorable regulation, the state, according to Bloom Energy's estimates, was expected to account for nearly 30% of national electricity demand for AI operations by 2028. Alphabet — Google's parent company — plans to build several data centers in Texas, and Musk, who spent hundreds of millions of dollars supporting Republicans, has moved the headquarters of Tesla, SpaceX and X there. After the vote he quipped: 'Data centers in space look pretty attractive right now,' referring to his satellite computing network project.

Market reaction and other states

Investors are concerned that tighter rules will make it harder to earn returns on the huge investments made by AI companies. 'None of this necessarily breaks the long-term AI theme, but it could raise the hurdle rate for investment,' noted Tickmill Group broker strategist Patrick Munnelly, listing possible areas of opposition: electricity consumption, environmental restrictions, strain on local infrastructure, competition policy and the social consequences of AI. Veteran analyst Jim Bianco pointed out that given the scale of the Democrats' victories and the 29-to-1 margin on the question of restricting data centers, politicians who want to keep their seats will heed these signals. Regulatory impact will be greatest at the state level: in Georgia, the new Democratic governor Keisha Lance Bottoms, as observed by SPI Asset Management, advocated a temporary statewide pause on new data centers and for large consumers to bear infrastructure costs themselves, while Ohio's governor-elect Amy Acton also promises a stricter regulatory framework for construction. For the reader, this means that the fate of specific projects — including Alphabet's plans in Texas — now depends on the decisions of new governors and legislatures, not only on the federal policy of Donald Trump, who favored minimal regulation of what he calls 'superintelligence.'