U.S. midterms may widen AI data center divide

U.S. midterm election results could slow data center development, increasing the value of existing AI capacity while raising financial pressure on debt-funded neocloud companies. Democratic victories in key gubernatorial races, including Texas Governor-elect Gina Hinojosa's proposed moratorium on new data center permits, signal tighter regulatory scrutiny. Markets reacted Wednesday with Microsoft and Amazon surging over 6%, while CoreWeave plunged 10% and chipmakers Micron and Nvidia fell. JPMorgan noted borrowing costs have widened significantly for neoclouds versus hyperscalers with diversified revenue. Projects planned for 2028 face greater permitting delays, while 2027 capacity is already under construction. CoreWeave's credit default swap spread has surpassed 1,100 basis points amid October declines for Nvidia-backed neoclouds.