Tag: META

Ahead of the election, there was much concern about the impact of a “Blue Wave” Democratic sweep on equities, particularly those related to the AI trade given the expressed desire from many Democratic candidates to slow the growth of data centers.

Predictably, as early returns showing just such a result came in Tech stocks fell with Nasdaq-100 futures down about 1.5% at midnight, but as of this morning, traders were rethinking things with those futures now higher and the S&P 500 indicated to open up around 1.2%. Meta Platforms ($META), Amazon ($AMZN), Nvidia ($NVDA) and Alphabet ($GOOGL) all trading higher before the open Bloomberg reported.

That may be because the first read from most analysts is that the Democratic sweep slows the AI data center buildout rather than stops it.

A Bigger Sweep Than Expected

Bloomberg reports that 54 Senate seats (a majority) are now in the hands of the Democrats with Alaska likely to follow (according to Goldman) and Mississippi a coin toss. In the House, Goldman sees a popular-vote margin of roughly 12 to 14 points, consistent with a majority of around 255 seats (Bloomberg has that currently at 232 Democrats). Its economists don’t think the Senate flip changes the federal outlook much, since the House was already expected to turn.

The bigger change perhaps is in the statehouses. Republicans lost governor’s races in Texas, Ohio, Nevada, Georgia and Michigan, and Democrats won full control in Pennsylvania and likely Arizona.

How Much of the Buildout Is Exposed

Goldman estimates the states likely to tighten data center rules hold about 45% of planned U.S. capacity, with Texas alone about 25%. It expects Democratic governors in Texas, Georgia and Michigan to impose conditional moratoriums until new laws pass, which could end tax breaks and tighten water, power and environmental rules.

Texas is currently a key state for the buildout. Bloomberg cites SemiAnalysis putting Texas at nearly 30% of the U.S. capacity due online in 2028, and GLJ Research estimating about 13 gigawatts there is immediately exposed. GLJ expects fully permitted projects with power to keep going, while those with power but no state permits slip 12 to 18 months. Jefferies thinks new Texas rules are more likely to raise development costs than to materially shrink the pipeline, and PIMCO’s Libby Cantrill expects “a lot more sand in the gears” even without statewide moratoriums.

Similarly Goldman says Ohio was one state where Democrats didn’t run explicitly on tighter data center rules, but Bloomberg notes Governor-elect Amy Acton has called for a conditional moratorium, which matters for the cluster of projects around Columbus.

• Jefferies: new Texas rules are more likely to raise development costs than to materially shrink the pipeline.
• PIMCO’s Libby Cantrill expects “a lot more sand in the gears” even without statewide moratoriums.
• Goldman: “In each of these states except Ohio, the Democratic side explicitly campaigned on stricter data center regulation, and we expect Democratic governors in Texas, Georgia, and Michigan to impose conditional moratoria pending new legislation restricting data centers. That legislation could end certain tax breaks (a priority for Hinojosa), tighten environmental, water, and electricity rules, and make it easier for localities to impose their own moratoria….since data centers are low on the list of priorities for voters this election, we expect that the issue will fade somewhat in importance in the ensuing months and that these moratoria will not be long-lived if they are enacted.”

So the thinking so far: slower permits and higher costs, not a shutdown.

The Positive Angle

Not everyone reads this as bad news. BofA economist Aditya Bhave notes real AI-related capital spending has grown at about a 26% annualized pace since the first quarter of 2025, a front-loaded wave he calls “symptomatic of over-investment.” Slowing it now, he argues, could lower the risk of a harder landing later.

Goldman’s head of European equities trading, Rich Privorotsky, told clients AI stocks had been “sold to death” into the vote, according to MarketWatch. He thinks companies may pull spending into 2027 to lock in today’s permitting, and that limits on new supply make capacity already running more valuable, which favors Amazon, Microsoft ($MSFT) and Alphabet. For neocloud providers such as CoreWeave ($CRWV) and Nebius ($NBIS), he says it depends on how much of their compute is contracted versus already built. Privorotsky also expects volatility to fall quickly now that the election is over.

Beyond Data Centers

On fiscal policy, Goldman expects Democrats to reverse last year’s spending cuts, adding about 0.25% of gross domestic product to 2027 spending, per MarketWatch. The first test is December 11, when government funding runs out; Goldman sees a short-term extension to February or March as most likely. Corporate America is also bracing for a wave of congressional investigations once Democrats gain subpoena power, the Financial Times reports.