HONG KONG: Opponents of data centres were among the biggest winners of the Democrats' landslide wins in the US midterm elections, pointing to a shifting public mood on AI and, investors said, a possible slowdown of the boom that has propelled US economic growth and stock markets.
The size and breadth of the Democratic wave were still coming into focus. But in gubernatorial races in Texas and Georgia, Democrats who campaigned in part on a moratorium on data centre development won offices that the party had not held for decades.
Their victories hand political heft to the backlash against the projects, which are at the heart of the AI boom but are loud, thirsty for water, hungry for electricity and increasingly unpopular with their neighbours, investors said. Investors say the results are likely to usher in tougher regulation and could ripple across financial markets where AI stocks were falling on Wednesday; big bets have already started to wobble due to concerns about spending and overcapacity.
"In our view, the significance of these midterm elections is more like a referendum on AI than a referendum on Donald Trump," said Aidan Yao, a senior investment strategist at the Amundi Investment Institute, the research arm of Europe's largest asset manager.
"If the AI theme is subject to some restrictions, then the US economy, US inflation and US monetary policy all become very, very uncertain." TEXAS SWEEP: The most stunning ballot box repudiation was in Texas, which GLJ Research has estimated accounts for about a quarter of US data-centre capacity that is due to come online by 2030.
Democrat Gina Hinojosa ousted Greg Abbott as governor in an upset that ended three decades of Republican hold on the office, while fellow party member James Talarico became the senator-elect. A conservative, oil-rich state, Texas has worked for years to reinvent itself as a tech hub, attracting companies like SpaceX and entrepreneurs like Elon Musk, who donated more than $150 million to the Republican campaign.
But even Republicans turned against data centres, which opponents say drive up utility bills, pollute the night sky with lights and do not create sufficient jobs or taxes to justify the incentives that states pay.