Will the Democrats’ Big Win Stop the AI Buildout? — With Teddy Schleifer

Democratic sweep puts the AI buildout in political jeopardy

Democrats won both chambers of Congress, and the AI buildout now faces a Congress less friendly to it. The industry's politics are becoming local as well as federal, since data centers need approval from the places that host them. Federal legislation is unlikely with a Republican in the White House, so the pressure will come through hearings and investigations. The 2026 results will shape 2028, when data centers are likely to draw heavy political spending.

Takeaways

• Democratic sweep ends tech's unencumbered political era. Democrats won both chambers of Congress, with the Senate at 54 to 44 and the House at 237 to 147 while counting continued. Teddy Schleifer says the new Congress will be less pro-AI and less pro-data-center than the past two years.
• Voters rejected data centers in 38 jurisdictions. The Washington Post reported that voters in at least 38 jurisdictions passed bans or restrictions on data centers. Schleifer calls the votes as close to a national referendum as a new industry gets, and notes the referenda went 38 to zero.
• Data center fights now decide elections. Texas holds 30% of data center development, and Democrat Gina Hinojosa beat Governor Greg Abbott after using data centers as a millstone. The industry's first super PAC failed to elect Darlene Graham in South Carolina.
• Musk's record midterm spending backfired. Elon Musk spent nearly $500m, the most ever by a non-candidate, and Schleifer calls the result a dramatic failure. Musk could face probes over his DOGE work, and his jokes about the spending suggest he knows it went badly.
• Tech donors killed California's billionaire tax. A one-time 5% tax on net worth over $1bn looks defeated after more than $330m went to a nonprofit linked to Sergey Brin. Patrick Collison and John Doerr recruited donors, and a second proposition banning such taxes looks likely to pass.
• Markets bet Democrats will slow AI spending. Amazon rose 8.3% and Microsoft 7%, with Alphabet up almost 6% and Apple more than 6%. The five behemoths are on pace to add nearly $1tn in market value, which Kantrowitz says reflects a bet that government will make companies stop spending.

What comes next

• Schleifer expects guardrails in legislation and investigations. He says big tech and AI CEOs will be called to Washington, and some Republicans will probably join in.
• Sweeping federal AI reform still needs both chambers of Congress and President Trump's signature, which Schleifer calls unlikely. Some deal making is possible.
• Schleifer says the 2026 campaign shapes the 2028 campaign, as 2024 was shaped by 2022. He predicts heavy political spending on data centers by 2028.