Sarah Bianchi on Market Reaction To Midterm Elections

Sarah Bianchi expects delays to AI infrastructure projects and says some communities may gain more authority to reject data centers after the US midterm election results. Texas’s incoming Democratic governor has indicated she could go beyond a moratorium, potentially requiring projects to forgo tax incentives and provide community benefits and local control. The comments come amid a sharp market selloff and steep declines in semiconductor stocks; no specific market impact from the election outcome is quantified.

Analysis

The key transmission channel is permitting duration, not an immediate collapse in AI compute demand. Longer approval timelines reduce the value of speculative, unpowered land and push deployments toward sites with secured power, existing permits, or room to expand. That could shift bargaining power toward incumbent data-center operators and power providers, while delaying revenue recognition for greenfield projects and the associated near-term orders for servers, networking, and electrical equipment. Some demand may also move to less restrictive jurisdictions rather than disappear.

The semiconductor selloff may therefore be an overreaction if it assumes a broad reversal in hyperscaler capex; local siting constraints do not by themselves invalidate compute plans. But a multi-state permitting pattern could turn a timing issue into slower infrastructure deployment over 6–18 months. Texas policy language, local-government authority, and project-level permit outcomes are the near-term catalysts. The political proposal is not yet evidence of enacted rules or canceled projects.

Key Decisions for Investors

• Avoid adding to a broad semiconductor short solely on this news. Reassess if major cloud buyers cut or defer capex guidance, or if equipment orders weaken beyond project timing shifts; otherwise the selloff may price in more demand destruction than the evidence supports.
• Put a relative-value pair on watch: long operators with powered, permitted capacity versus short developers whose economics depend on unpermitted greenfield pipelines. Initiate only after reviewing company-level project exposure and lease commitments; hedge broad technology beta. The thesis is falsified if local approvals remain routine or incumbent sites face comparable restrictions.
• Over the next 1–3 months, track Texas legislative and permitting details, local veto authority, and announced project delays or cancellations. Also monitor whether hyperscalers redirect builds across regions rather than reduce aggregate capex.
• Treat grid, transformer, and power-generation beneficiaries as conditional—not automatic—winners: rerouted projects can preserve equipment demand, but prolonged delays could defer orders across the supply chain. Look for order/backlog commentary before positioning.