Susannah Streeter, chief investment strategist at Wealth Club, said the steep sell-off on the Nasdaq and the S&P 500 was sending shockwaves into other markets.
“Fresh panic over the AI trade has hit Wall Street hard,” she said.
“Fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on are now colliding with the prospect of a sharp slowdown in data centre construction.”
Greater scrutiny of data centre approvals, and their impact on the environment and electricity bills could delay projects and raise costs across the industry, said Charu Chanana, Chief Investment Strategist at Saxo.
While both political parties are keen to ensure the US’ dominance in the technology, “there is a difference between supporting AI development and allowing infrastructure to expand at any cost or pace,” she said.
Some tech leaders have said they were caught off guard by the backlash against data centres in the midterms.
OpenAI president and co-founder Greg Brockman said he believed everyone had been surprised by the reaction to data centres, and more work needed to be done to ensure communities were on board.
“A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities,” Brockman said at the WSJ Tech conference in Napa, California on Wednesday evening.
Meta’s president Dina Powell McCormick said that the industry needed to put more effort into selling AI as a good idea.
“I think we need to double and triple down on telling the story,” she told the WSJ conference.
Alongside the immediate impacts of the US mid-term elections, some investors have become concerned that AI shares could be in a bubble that is due a correction.
With additional reporting from Lily Jamali
Source: www.bbc.co.uk
