The Zhitong Finance App learned that data center construction faced a slowdown due to the “blue wave” of the US midterm elections, but Dan Ives of the investment agency Yorkville Ives gave a counterintuitive judgment: the contraction in supply instead left Microsoft, Amazon, Alphabet, and Meta “blessing in disguise.” The AI revolution won't be cancelled — it's just that the peak of capital expenditure was brought forward from 2028-2029 to 2027.
The answer given by investment agency Yorkville Ives was surprising to many: it may be “hugely bullish” (hugely bullish) for major hyperscale cloud vendors. This change in the pace of construction is “extremely beneficial” to Microsoft (MSFT.US), Amazon (AMZN.US), Alphabet (GOOGL.US), and Meta Platforms (META.US), and in some cases Oracle (ORCL) is also included. “We assume that under this 'blue tide', about 10% of the planned 800 to 1,000 data centers in the US will not be built... and take an even harsher scenario — 30% will be cancelled within the next 18 months... This means that any player with a built and running capacity/GW/GPU is significantly more valuable than 48 hours ago,” Dan Ives wrote in a report to customers.
Ives believes that even under the harshest scenario, the overall capital expenditure will remain at the level of 3 trillion to 4 trillion US dollars in the next few years, and next year alone, the capital expenditure of large technology companies will exceed 1 trillion US dollars. “Essentially, the 'blue tide' brought the high point of big tech capital expenditure growth ahead of our previous predictions of 2028 or 2029 to 2027 — but that won't cancel Christmas; the AI revolution will continue to happen; it's just slowing down.”
One focus of the question is how Texas's new governor, Gina Hinojosa, will act — this is particularly important because companies such as SpaceX (SPCX) and Tesla (TSLA) have a strong presence in the state. After the upset victory, Hinojosa stated on the TV program that she did not want to permanently stop the construction of the data center, but rather wanted to make the construction “fairer for businesses and citizens.”
Supply-side figures amplify the impact of any policy disruptions: by the end of this year, about 40 gigawatts of data center capacity will be online in the US, and another 40 to 50 gigawatts will be built and put into operation next year — which means any turbulence in the industry could have disproportionate consequences.
As far as the semiconductor industry is concerned, Ives believes that the pace of construction will be more scattered in the next three to four years, and market concerns about “overconstruction” and overcapacity may dissipate. He also said that the slowdown could reduce the financing scale of large technology companies by about 25% next year.
“The AI revolution will come no matter what,” Ives explained. “Democratic Party leadership, including Hakeem Jeffries, the next Speaker of the House of Representatives, needs to be careful while driving the slowdown in US data centers — to ensure that the political game does not cede the leading position in this global AI arms race to China in the next few years.”