Analysis-Trump’s midterm drubbing demonstrates the power of data center opponents

Opposition to data centers played a significant role in the Democrats' strong performance in the US midterm elections, indicating a changing public sentiment toward AI and the potential impact on the US economic boom, according to investors. In key gubernatorial races in Texas and Georgia, Democrats who advocated for data center moratoriums emerged victorious, marking a major shift in public opinion.

This victory grants opponents of the data center projects considerable political influence. Stocks of US-based data center companies dropped sharply as the Democratic election results became apparent, with Core Scientific falling by 11.6% and Iren down by 12.5%. The results are expected to lead to stricter regulations and could have ripple effects on financial markets, especially for AI-related stocks.

Aidan Yao, a senior investment strategist, noted that the significance of the midterm elections is more about AI than Trump. A narrow focus on AI could lead to uncertainty in the US economy, inflation, and monetary policy. The most significant result was in Texas, which holds about a quarter of the US data center capacity by 2030.

Democrat Gina Hinojosa defeated Republican Greg Abbott for the governorship, and Democrat James Talarico won the Senate seat. Texas, despite being a conservative state, has been working to become a tech hub and attracted companies like SpaceX and billionaire Elon Musk. However, even Republicans are turning against data centers, citing higher utility bills, sky pollution, and insufficient job creation.

If the data center and AI business is affected, analysts predict a shift towards more regulations and tighter oversight rather than a full moratorium on construction.