While Wall Street focuses on capital expenditure, Yorkville Ives partner Dan Ives argues that growing political backlash against data center buildouts is the single biggest threat to the tech revolution, following his tour of Midwest infrastructure sites.
The ‘Hearts and Lungs’ of AI
Ives told CNBC that the physical infrastructure of the AI revolution is facing unprecedented local resistance. After observing heavy investments and innovation from tech giants like Meta Platforms Inc. (NASDAQ:META) and Google’s parent company, Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), in Nebraska, he noted that these facilities serve as the “hearts and lungs” of the AI buildout.
The analyst estimates that between 1,000 and 1,500 data centers are currently in motion across the United States to power demand for hyperscalers and neo-clouds.
However, community pushback is escalating. Protesters in Austin, Texas, are demanding moratoriums, and a $100 billion project in Virginia was recently scrapped. Ives projects a base case where 10% to 15% of proposed U.S. data centers could ultimately get cut.
A ‘Boxing Match Debate’
The geopolitical stakes are historic. For the first time in 30 years, Ives notes, the U.S. is ahead of China in technology, arguing that maintaining this lead will require continued investment in domestic AI infrastructure.
As the nation moves toward the midterm elections, Ives fears that local zoning and tech expansions will become deeply politicized. “It’s not capex, it’s not use cases, it’s not what I view as the bull case,” Ives emphasized.
“It’s really politicians getting involved in the AI buildout.” He predicts the issue will not fade quickly, but will instead become a “boxing match debate” on the campaign trail.
The ‘Calculus Changes’ for Tech Stocks
If cancellation rates double past Ives’ 15% threshold, the broader market will feel the sting. A severe bottleneck in physical capacity means enterprise customers will face higher costs, and a high-stakes game of “musical chairs” will begin for the remaining computing space, he explained.
When asked if tech stocks will suffer under this scenario, Ives was unequivocal. Software developers, hyperscalers, and neo-cloud companies will all “pay a price” if the data center pipeline stalls. The next six to nine months, he warned, are a critical window for the trajectory of the AI revolution.
How Have AI-Linked ETFs Performed?
| Stocks | YTD Performance | Six Months Performance | One Year Performance |
| iShares Future AI & Tech ETF (NYSE:ARTY) | 56.46% | 58.22% | 78.97% |
| Roundhill Generative AI & Technology ETF (NYSE:CHAT) | 51.03% | 46.05% | 67.50% |
| Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ) | 25.23% | 31.78% | 42.74% |
| WisdomTree AI and Innovation Fund (BATS:WTAI) | 43.93% | 42.85% | 61.68% |
| iShares Semiconductor ETF (NASDAQ:SOXX) | 70.49% | 55.28% | 112.91% |
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: USA Today via Reuters Connect