Joe Maher says US midterms could spark a longer AI equity unwind

Voters passed dozens of measures calling for datacentre expansion limits

Joe Maher of Capital Economics said last week that “Sentiment towards the AI trade was already looking fragile and the US equity market was showing many late-cycle signs. As such, this [the midterms] could plausibly become the catalyst that leads to a more long-lasting unwind of the AI equity boom.” Heather Stewart’s subhead said, “Election results appear to have turbo-charged an already growing social, political and financial market rethink about AI.” She wrote: “Whether the tech sell-off resumes this week remains to be seen; but the anti-AI sentiment evident in last week’s results appears to have punctured at least one narrative that was sustaining the market boom.” She also wrote that “This shift seems to have accelerated a market rethink that was already under way.”

Stewart attributed much of the Democratic wave to the cost-of-living squeeze she linked to Trump’s war in Iran, writing: “Clearly, the cost of living squeeze unleashed by Trump’s war in Iran was a big driver of the Democrat wave.” She added: “But AI was also on the ballot – in many places, literally.” Stewart reported that dozens of measures calling for limits on datacentre expansion were passed and that elsewhere, reining in “the unchecked expansion of the power-hungry mega-sheds” was a rallying cry.

At a campaign event, Texas senator-elect James Talarico recalled meeting a mother who told him the lights from the neighboring datacentre were so bright that her son thought it was daytime in the middle of the night, Stewart reported.

A photograph accompanying the column showed the Markley Lowell datacentre surrounded by residential homes in Lowell, Massachusetts. Its caption said some local people had labeled the site “the Dungeon” because of “the imposing black silhouette it presents.” Lauren Owens Lambert photographed the site for AFP/Getty Images. The page also included a Saturday opinion cartoon by Steve Jones, credited to Steve Jones/The Guardian.

Among the market concerns that predated the election, the International Monetary Fund pointed last month to “growing evidence” that the successful rollout of AI “may not require investment on the massive scale being undertaken by ‘hyperscaler’ firms,” and that “potential economic gains may not be as large as expected.” The fund also highlighted the growing capabilities of lower-cost Chinese models and pointed to the circular financing that had become rife within the AI sector.

TS Lombard’s Dario Perkins wrote in a recent note, in the past tense as if in the aftermath of a future AI crash: “What people who worked in tech and finance didn’t realise was that people outside the ecosystem – you know, regular people – just weren’t that interested in AI.” He continued: “Yes, it made web search easier (sort of); but contrary to the assumption in Silicon Valley, regular people were never going to use AI to organise their lives or ‘run workflow’. Tech insiders were living in a bubble – in at least two senses of that phrase.”

Perkins described the industry in late 2026 as essentially “$200bn in current revenues supporting more than $1tn in future commitments from just two companies [Anthropic and Open AI]”.

More recent reports highlighted a string of corporate AI users either slapping limits on staff use of costly products such as Anthropic’s Claude or turning to much cheaper models hosted on their own servers, Stewart wrote. She said the datacentre backlash appeared to have brought new focus to some of these pre-existing concerns.

Stewart wrote: “Two things can both be true: AI is a transformative technology that will bring welcome productivity benefits; but they won’t be big enough to justify current market valuations.” She also wrote, “A reckoning was already in the offing, even without the intervention of US voters.” She noted that the tech-heavy Nasdaq had peaked a month earlier and that a growing number of voices were sounding the alarm. Separately, FRED listed the Nasdaq Composite at 24,579.42 as of 8 November 2026.

Stewart wrote: “Last week’s midterms may not have cowed Donald Trump, but they should be a wake-up call for the grinning tech broligarchs who lined up at his inauguration two chaotic years ago.” She framed the AI buildout this way: “Every bubble needs a story, and for AI, one chapter involves carpeting the US in debt-funded datacentres, which will become necessary – and viable – as demand for the technology increases.” She wrote that after the vote, that proposition “looks a lot less feasible.” She also wrote: “It turns out, chucking up hundreds of these humming warehouses, while simultaneously warning workers they may be superseded by an army of superhuman bots, is not great PR.”

Stewart wrote that “The public were meant to set aside their qualms, for the greater good that AI would bring the economy.” She said the positive benefits many people may derive from interacting with chatbots – “the shopfront of AI for most of us” – coexist with “very obvious downsides.” Her examples included “the sea of online slop,” “those pervert glasses” and tech firms’ insistence on “shoehorning the technology unbidden into every app, platform and device.” She noted that tech writer Cory Doctorow calls the final dynamic “enshittification”.

Stewart said voters had watched the leaders of the big tech firms become “obscenely rich” while average consumers continued to be “hammered by inflation,” and that the electorate seemed to have decided “enough.” She wrote: “Ultimately, all businesses in a democracy – even those embraced by the US president – have to operate within the bounds set by society. And the tech bros have done a terrible job of winning over the public.” She also wrote: “Elon Musk’s approach in Texas, where he poured billions of dollars into trying to buy the electorate, just became a selling point for the Democrats.”

Stewart wrote: “It remains to be seen whether objections to datacentre expansion are the start of a more radical shift in opinion that will eventually tame the tech companies, redolent of when Teddy Roosevelt swept into the White House at the turn of the 20th century to set about breaking up the oil and railway monopolies.” At the very least, she wrote, the opposition seemed likely to “put the brakes on the hectic pace of investment in building out AI’s physical infrastructure.”

Stewart concluded: “Whether the stock sell-off persists or not, opposition has thrown down the gauntlet for the AI lobby to prove what the tech can do for societies – including those well beyond the US – which are reluctant to accept the very obvious costs.”