Democrats' victory in the US midterm elections could lead to stricter data-center restrictions, negatively affecting artificial intelligence sentiment, Morgan Stanley said in a note Wednesday.
The bank said the practical risk they see is that new state-level policies could create a divide between US regions that allow new data centers and those that restrict them.
Key factors affecting projects, including interconnection, large-load rate design, site approvals, and tax incentives, are largely controlled by state commissions, legislatures, and county boards, the firm added.
The bank said Texas is a key concern following Democrat Gina Hinojosa's election as governor. Her campaign included a proposal to pause approvals for new data centers, creating a risk of significant delays to data-center projects and construction.
"By far, the most important election result, from the perspective of data center development, was the Texas gubernatorial election," the brokerage added.
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