Why Democrats' win in US midterms could spell trouble for the AI boom

The Democrats' win in the US midterms has raised fears of tighter restrictions on data centre construction and AI development, leading to a fall in global technology stocks

Several Democratic leaders in the US have called for tighter restrictions on artificial intelligence (AI) development and data centre construction following the party's strong performance in the November 3 midterm elections.

 

The results have strengthened the position of politicians who have opposed the rapid growth of data centres, raising concerns about their high electricity use, environmental impact, rising power bills and effects on local communities. This opposition could pose challenges for technology companies that have invested heavily in AI infrastructure.

 

Democrats call for a pause in AI and data centre expansion

 

Senator Bernie Sanders, an independent from Vermont who caucuses with the Democrats, called for a nationwide halt to new data centre development following the election.

 

 

In a post on X, Sanders pointed to local ballot measures across the country in which voters supported restrictions on data centre projects. “National data center moratorium now,” he wrote in the post. “Americans don’t want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity’s future.”

 

Representative Yassamin Ansari, a Democrat from Arizona, also called for a pause in AI development, saying it should be a priority for the party's large majority in the House of Representatives from the first day of the new session. 

 

Representative Greg Casar, a Democrat from Texas and chair of the Congressional Progressive Caucus, backed her demand, responding to her post with, “Yes!”

 

Democratic leaders have also said that decisions on large infrastructure projects should involve local communities rather than technology companies and wealthy investors.

 

How data centres played a role in midterm results

 

Opposition to data centre expansion emerged as an important issue in several local and state-level contests during the midterm elections.

 

According to The Guardian, data centre development featured in elections across at least 40 jurisdictions in 10 states. Voters approved nearly every proposal seeking a temporary halt or restrictions on new projects.

 

In Ohio, at least 14 municipalities approved bans or restrictions on data centre development. In Maine, eight municipalities voted in favour of temporary moratoriums. Voters in Emporia, Kansas, also approved a ban on high-impact data centres.

 

The issue gained attention as communities raised concerns about the resources required to operate these facilities. Data centres consume large amounts of electricity and water, while their construction can also affect local infrastructure and the environment.

 

The CNBC Voter Poll found that 56 per cent of voters considered AI and data centres an important or major issue when deciding whom to vote for. Among these voters, 65 per cent said they had voted for a Democratic candidate for Congress.

 

US President Donald Trump has backed the expansion of data centres, describing them as important to the country's technological leadership and economic growth. His administration has also pushed for faster development of AI infrastructure.

 

Democratic candidates made these concerns a part of their campaigns, calling for greater oversight and restrictions on new projects.

 

Texas was among the most closely watched states because of its importance to the data centre industry. According to The Guardian, around 25-30 per cent of planned US data centre capacity is expected to come from the state.

 

Democrat Gina Hinojosa, who defeated Republican incumbent Greg Abbott in the governor's race, had promised to stop new data centre approvals until legislation protecting residents could be introduced.

 

“When I am governor, I will issue a moratorium, a ban, on all data center approvals until laws can be passed by the legislature to protect Texans,” she said in a video posted on X in October.

 

She added, “This is about one fight. Is this going to be a Texas that is by and for the people, or is this the billionaire’s world and we just live here? Data centres are part of that fight.”

 

Democratic candidates in other states also raised the issue. Pennsylvania Governor Josh Shapiro, who had signed an executive order in August to slow data centre development, said local communities should have the final say on such projects.

 

In her victory speech, South Carolina Democrat Annie Andrews also criticised the influence of technology companies and wealthy investors over local decisions.

 

“I do not work for data centers,” Ohio Democrat Sherrod Brown said in his victory speech after defeating Republican incumbent Jon Husted in the Senate race.

 

Global tech stocks fall after Democratic wins

 

The Democrats' win in the midterm elections also raised concerns among investors about future spending on AI infrastructure, leading to a sharp fall in technology and semiconductor stocks.

 

According to Reuters, US technology stocks suffered heavy losses on Thursday. The tech-heavy Nasdaq Composite fell 5.5 per cent, while the S&P 500 declined 4.4 per cent and the Dow Jones Industrial Average dropped 3.4 per cent. The sell-off wiped out an estimated $2.5 trillion in market value from the Nasdaq, according to Dow Jones data, BBC reported.

 

Semiconductor companies were among the worst affected. Nvidia shares fell around 9 per cent, while Advanced Micro Devices (AMD) declined more than 17 per cent. The Philadelphia Semiconductor Index dropped 12 per cent, marking its biggest single-day fall since April 2025, Reuters reported.

 

The selling also spread to Asian markets on Friday. Japan's Nikkei 225 came under pressure, while shares of South Korean chipmakers SK Hynix and Samsung Electronics also declined.