What’s on Our Minds

The AI infrastructure build-out is likely to slow at the margin after the midterm-driven sell-off, while the projects already under construction continue to support the ecosystem.

• The S&P 500 fell 4.4% on Thursday, its worst day since April 2025, as opposition to data center development became a central issue in several midterm races.
• The PHLX Semiconductor index fell another 12% last week after already weakening, reflecting fears that AI infrastructure investment could stop.
• Nearly 600 data center campuses are already under construction nationwide and are expected to increase the operating base by 40%.
• Another 2,600 campuses remain in the planning stage and could face slower, more difficult, and more expensive permitting.
• Projects in the planning stage may also move to jurisdictions that welcome data centers, while politicians assess the related economic and tax-revenue trade-offs.

Takeaway: Investors should expect a more supply-constrained AI infrastructure market at the margin, while the scale of projects already under construction argues against treating the political backlash as the end of the AI ecosystem.