Nomura has flagged growing political headwinds to artificial intelligence (AI) investment in the US following the Democratic Party's strong performance in the November 4 midterm elections, warning that tighter regulation of data centre construction could become a significant risk to the investment boom from 2028.
In its November 4 report titled 'US Midterms Recap - Blue Tsunami', the research firm said Democrats had outperformed expectations and appeared on track to secure strong majorities in both the House and the Senate. "A Democratic takeover of Congress will likely constrain the Trump administration's legislative agenda over the next two years, increasing the likelihood of policy gridlock," it said.
Democrats would also gain greater oversight powers, while control of the Senate would allow them to block presidential appointments. "In particular, a Democratic Senate will limit Trump's ability to appoint his loyalists to Federal Reserve vacancies, reducing the tail-risk to Fed credibility," Nomura said.
The midterm elections "highlight growing political headwinds to AI investment, with opposition to data center construction emerging as an increasingly important bipartisan issue", Nomura said.
It added that "tighter regulation of AI infrastructure could become a key issue ahead of the 2028 presidential election, posing downside risks to the medium-term capex outlook".