AI investors forced to navigate the blue wave
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Illustration: Aïda Amer/Axios. Stock: Getty Images
Venture capitalists love to talk about pivoting. Good. They're gonna have to.
The big picture: This isn't about personal politics, although there are certainly some venture frontrunners who will hope that folks memory-hole the past two years.
- It's about how the investment math may have just changed for AI — which now dominates venture investments and returns.
Driving the news: Democrats yesterday wrecked Republicans at the federal, state, and local levels.
- This includes governor offices in states with the most data centers under construction.
- In market leader Texas, Gina Hinojosa pledged to end data center-related tax breaks. Research firm SemiAnalysis suggests that her victory could lead to extended delays for up to 41% of data center capacity planned in the U.S. for 2028.
- In Georgia, Keisha Lance Bottoms campaigned on a statewide "pause" for new data center construction. In Ohio, Amy Acton said she wants a conditional moratorium.
- It also appears that dozens of ballot questions on data center restrictions passed.
Zoom in: AI obviously isn't going away, but long-term projections of its unrestrained growth may be.
- Venture capitalists will need to account for this new environment, particularly when it comes to valuations.
- Not only for companies that are explicitly focused on AI, but also for AI-affiliated companies in areas like energy, health care, and defense tech — which may have its own problems, particularly if Pete Hegseth gets booted.
Zoom out: OK, so maybe this is a little bit about personal politics. Or at least about political contributions.
- A lot of top venture capitalists spent big money boosting Republicans this cycle, which means they'll struggle to get face time with incoming Democrats.
- If data center pushback is really a "messaging" problem, as so many AI advocates believe, then there is an elevated risk that the VC message won't be heard.
Market reax: It's worth noting that the Nasdaq threw up on itself last night when it became likely that Hinojosa would win, but has since rebounded on the prospect of divided government gridlock.
The bottom line: The politics will change again, because they always do. But technology is moving too fast for investors to wait.
