Analysts say the results of the gubernatorial and Senate elections in Texas could add volatility to artificial intelligence (AI) stocks, which have recently been undergoing a correction.
According to CNBC on November 3, local time, political and financial market experts view the Texas gubernatorial and US Senate elections as a potentially important turning point for investment in AI data centers.
Republican incumbent Texas Governor Greg Abbott is seeking a fourth term, facing challenges from Democrat Gina Hinojosa and Libertarian Pat Dixon.
In the US Senate race, Democrat James Talarico and Republican Ken Paxton are in a close contest.
Texas is a key location for the US AI data center industry.
According to Wells Fargo, about 27% of US data center power capacity is concentrated in Texas.
A University of Houston survey of 2,000 Texas voters conducted from October 10 to October 14 found that more than 80% of respondents were concerned about data centers' effects on water supplies and electricity rates.
Abbott halted new data center permits in September, saying, “Texas residents must come first.”
John Sonsalla, head of Washington Analysis, said, “The concerning outcome would be Talarico winning the US Senate seat while Hinojosa defeats Abbott. In that case, the scale of the negative impact on the AI investment theme would become important.”
Evercore ISI strategist Julian Emanuel expressed a similar view.
Emanuel said, “The health of the AI revolution will be affected by the Texas gubernatorial election. If Abbott wins, Abbott is likely to lift the data center moratorium, while Hinojosa is expected to maintain it.”
AI stocks have already undergone a sharp correction amid concerns over financing, valuations and the profitability of data center investment.
The Nasdaq 100 Index has fallen 10% from the record high reached in October, entering a technical correction, while the Philadelphia Semiconductor Index (SOX) has declined about 19% over the past month.
Concerns about the profitability of cutting-edge AI models, large capital expenditures, companies' cash holdings, smaller cloud providers' debt burdens and the macroeconomic environment are simultaneously weighing on investor sentiment.
Other data center policies have also emerged as issues in the Texas elections.
The Texas Tribune reported that Talarico had proposed eliminating some tax support while strengthening labor, environmental and grid-use standards.
However, analysts say that while major Democratic victories in Texas state and local elections could weigh on data center investment, the party's gains at the federal level could potentially benefit some AI companies.
Washington Analysis analyst Rob Rains said, “Efforts to protect the industry and counter Chinese competitors are likely to intensify substantially. This would be an important priority in a Democratic-controlled Congress or Senate.”
Observers also consider US President Donald Trump likely to veto regulations that could constrain long-term technology investment.
TD Cowen analyst Paul Gallant said, “Given President Trump's technology policy, I expect Trump to veto aggressive AI model safety legislation that poses a significant risk to the AI investment theme.”
Gallant added, “The key issue, therefore, is whether Democrats pursue AI safety legislation that President Trump could accept, or instead introduce AI messaging bills aimed at the 2028 election.”
Original Korean article: kbthink.com
English brief by Korea Wind Intelligence, koreawindintel.com
