The Blue Wave May Be Good News For AI

Democrats achieved historic results in the 2026 midterm election. AI and data centers weighed on the electorate, and voters sent a clear message rejecting the current administration’s policies. An anxious market reacted with extreme volatility; the Nasdaq went up by 1.4% on the day after the election, only to come down by 5.5% the day after. But the AI trade is different from the long-term prospects of AI as a transformative technology. For this, the change in the political environment ushered in by the blue wave may be good news.

Exuberance And Excess

The AI infrastructure buildout has been the engine of the United States’ GDP growth this year. Stijn Van Nieuwerburgh, a professor at Columbia Business School, writing for the Brookings Papers on Economic Activity, estimates that financing the AI buildout will require $10.3 trillion from 2025 to 2032, about 3.6% of US GDP per year. Larry Fink, CEO of BlackRock, sounded the alarm on the Wall Street Journal editorial pages: “When all that investment demand collides with a limited supply of capital, borrowing becomes more expensive for everyone.”

The financial news cycle revolves around the AI industry and its supply chain. Data center demand seems infinite, capped by suppliers’ ability to produce components, a lack of skilled labor to stand up major compute plants and an aging energy grid struggling with the needs of a country accelerating on AI while trying to recreate its lost manufacturing capacity. The administration saw in AI an opportunity to demonstrate America’s superiority in a geopolitical race against China while driving the economy. The technology industry, a direct beneficiary, jumped to support the messaging.