US elections: Democratic gains put AI rollout and market valuations in focus

Commenting on the US midterm election results, Paul Gibney, Partner in LCP’s Investment team, said:

“It’s clear that that the sweeping gains made by the Democrats in yesterday’s US midterms were testament to the adage ‘it’s the economy stupid. Voters took the opportunity to vent their frustration at President Trump on the high cost of “gas” and more generally, cost of living pressures. 

“For investors, one area to watch will be if the Democrats’ success will have implications for faith in the AI story, which has been experiencing a few recent wobbles.

“For example, data centre construction is key to AI momentum and that could be under threat given Democratic wins in states key to that build out, in particular Texas, where the Democratic Governor-elect has been an outspoken critic of the rapid expansion of AI data centres in the state.

“With so much of the US equity – and by extension global equity- market tied to the AI theme, investors will be watching these developments closely. Any material loss of faith in the AI roll out could have significant consequences for market valuations, although it is too early to judge whether the election results will materially change that outlook.”