'Techmageddon' may finally be kicking off after blue tsunami casts doubts on AI's data center and funding future. Is your portfolio prepared?

During his second term, President Donald Trump has been supportive of the sector, advocating for fast-moving innovation and robust investment, despite existential fears warranting a more tempered approach.

But with the proliferation of data centers serving as a key pain point — thus a campaign issue — experts foresee potential challenges to AI-related legislation.

While Trump has teamed up with industry leaders, passing executive orders to remove barriers to and otherwise expedite tech growth, the introduction of a Democrat-led Congress was enough to spark a sudden selloff of chip and neocloud stocks.

Downturn shows sensitivity of market

Markets have leveled out since the election, but they remain in flux, partly due to earnings announcements and unrelated scandals. But the shock reminds investors how sensitive tech stocks are to outside influences, and how pro-AI government regulations are to their success.

Senior Managing Director of Yorkville Ives & Co., Dan Ives, echoed these sentiments in a note to clients.

“There is no way to sugarcoat that Democrats taking control, especially over the Senate, will create some major hurdles for AI and tech legislation in the Beltway over the next two years,” he wrote.

Americans have voiced their concerns about data centers’ energy and water usage, as well as noise and light pollution, and impacts on surrounding home values and local fauna.

Stakeholders have clapped back, highlighting the economic promise of AI while pushing back on critiques. OpenAI CEO Sam Altman, for example, says California almond farming is more of a freshwater hog than chatbot queries.

But that hasn’t stopped top Democrats from taking the opposing view of Trump’s, leaning into anti-data center sentiments. Senator Bernie Sanders called for a national moratorium on new data centers, while his colleagues have called for a “pause on advanced AI development”.