As the U.S. midterm elections approach on November 3, investors are closely monitoring potential impacts on the expansion of data centres critical to artificial intelligence (AI) development. The sector has been a key driver of the U.S. stock market's four-year bull run, with major companies such as Alphabet and Amazon investing heavily in data centre infrastructure. Spending on data centres and related AI technology is projected to exceed $1 trillion next year, underpinning corporate profit growth and market optimism.

However, growing public opposition to data centres—due in part to concerns over environmental impacts, rising energy costs, and unease about AI technology itself—is emerging as a significant risk factor. This backlash has heightened sensitivity among investors to any policy changes that could slow data centre construction. Christopher Gannatti, U.S. chief investment officer at WisdomTree, noted the issue’s tangible nature, pointing to the market signal driven by how much major corporations invest in data centres since the launch of ChatGPT in November 2022.

Market watchers suggest that a Democratic sweep of both the Senate and House, which is regarded as the most probable outcome based on trading in prediction markets like Kalshi and Polymarket, may increase scrutiny of the AI sector. Although analysts doubt that any federal legislation will significantly halt data centre development, Democratic control of Congress is expected to result in more hearings and investigations focused on AI and infrastructure buildout. This heightened oversight could contribute to market volatility in the sector.

While concerns about data centres are bipartisan, opposition is notably stronger among Democratic voters. A recent Reuters/Ipsos poll found that 69% of Democrats support limits on data centre construction, compared to 43% of Republicans. Some experts argue that despite potential Democratic control, significant legislation stalling construction is unlikely to become law, partly due to President Donald Trump’s support for AI development. Matt Gertken, chief geopolitical strategist at BCA Research, stated that any forthcoming regulation likely will not severely restrict capital expenditures or data centre builds, as Trump would likely veto such measures. Trump himself has suggested that data centre companies should pay a “dividend” to local communities to gain wider acceptance.

Furthermore, some legislators on both sides, aware of the strategic importance of AI for economic growth and international competitiveness—especially relative to China—may hesitate to impose restrictive measures. Nonetheless, the prospect of increased regulatory scrutiny, including congressional hearings and investigations, looms, with experts warning of possible negative headlines and resulting market fluctuations.

State and local elections are also drawing significant attention due to the authority local governments have over data centre approvals. Investors are watching key races in states such as Texas, Ohio, Pennsylvania, Georgia, Nevada, Wisconsin, and Michigan, including gubernatorial and legislative contests, as well as positions like utility commissioners. Maxwell Shulman, a policy analyst at Beacon Policy Advisors, emphasized the political salience of data centres at the state level and the potential regulatory consequences depending on which party gains control.

Overall, while policymakers’ actions and electoral outcomes introduce uncertainty that could disrupt project timing and costs, analysts generally agree this is unlikely to derail the broader AI investment theme. Kevin Shea, senior equity analyst at BNY Wealth, remarked that the political and regulatory landscape may cause delays or increased expenses but is not expected to halt progress in AI infrastructure investment.