AI is powering Trump’s economy, but American voters are getting worried

The Trump administration is aggressively promoting AI as an economic priority—signing an order to limit state restrictions, allowing Nvidia H200 exports to China, and touting AI-driven growth that analysts say accounted for more than half of U.S. GDP growth in H1 2025 and powered most S&P gains as big-tech capital spending has tripled and could top $500 billion in 2026. That boom is colliding with a grassroots backlash over data-center energy use and local costs—$98 billion of data-center investment was blocked or delayed in Q2—and local fights (e.g., Ohio projects promising 1,600 construction jobs but only ~120 permanent roles) are creating permitting, political and grid risks that investors and lenders are beginning to price. The White House plans an executive order to expand transmission capacity to blunt power-price headaches, but rising political and regulatory risks, plus concerns about employment displacement, complicate the investment and policy outlook underpinning the AI rally.

Analysis

The White House is actively promoting AI as an economic priority, signing an order to limit state curbs and approving Nvidia H200 exports to China, while many analysts attribute more than half of U.S. GDP growth in H1 2025 to the AI boom. Big-tech capital spending has tripled and JPMorgan projects aggregate tech capex likely exceeding $500 billion in 2026, which has concentrated S&P 500 gains in AI leaders.

Local backlash over data-center energy use and household electricity costs is producing tangible project and political risk: Data Center Watch identified $98 billion of stalled investment in Q2, and the Lordstown/Bristolville dispute illustrates the gap between temporary construction jobs (~1,600) and limited permanent roles (~120). Lenders are seeking hedges and commentators such as Howard Marks highlight employment risks, signaling investors are beginning to price regulatory and permitting uncertainty.

The administration’s planned executive order to expand transmission capacity is a potential mitigating catalyst but timing and effectiveness are unclear, leaving a two-track investment environment: sustained macro and capex tailwinds for AI beneficiaries versus elevated regulatory, local permitting and grid constraints that can compress returns for data-center–exposed assets. Watch policy implementation, electricity-price trends and local permitting outcomes as near-term determinants of risk premia.

Key Decisions for Investors

• Maintain or selectively increase exposure to AI leaders such as NVDA and major cloud/capex beneficiaries to capture the capex-driven growth thesis, while sizing positions to reflect heightened political and regulatory risk.
• Underweight or hedge companies and financings with concentrated exposure to new data-center builds or regions with constrained grids until permitting outcomes and local electricity-price trends improve.
• Monitor the White House transmission executive order, Data Center Watch permitting metrics, and quarterly capex guidance from GOOGL/META/AMZN/ORCL as primary catalysts to re-rate positions.
• Use options or credit hedges to protect against short-term policy shocks or a rapid sentiment-driven re-pricing if employment or electricity-cost narratives intensify.
• Trim or take profits on outsized winners if valuation gaps widen amid the ongoing bubble debate and growing lender/investor hedging activity.