Democrats Trigger AI Shock... Wall Street Split on “End of Investment” vs. “Buying Opportunity”

【Financial News, New York — Correspondent Lee Byung-cheol】 Wall Street is divided over whether the artificial intelligence (AI) investment boom can continue following the Democrats’ landslide victory in the midterm elections. Some warn that AI-related investment, expected to reach $1.2 trillion next year, could be curtailed if the Democrats tighten regulations on data center construction. Others argue that demand for AI itself remains strong and that the recent sharp drop in technology stocks should be used as a buying opportunity at lower prices.
 According to CNBC on the 5th, local time, Wall Street investment professionals were concerned that Democratic control of Congress could fundamentally alter the growth outlook for the AI industry. The Democrats are more critical of data center construction than the Republicans, raising concerns that tighter regulations could put the brakes on expanded investment in AI infrastructure.
Peter Boockvar, chief investment officer (CIO) at OnePoint BFG Wealth Partners, told CNBC, “Investors are now questioning whether the $1.2 trillion in capital spending expected next year can actually happen,” adding, “It’s possible that investment on that scale may not materialize.” He warned that the latest developments could signal the beginning of the end of the existing AI investment boom.
Eric Johnston, head of equities at Cantor Fitzgerald, also said, “There has been a huge shift in the outlook for AI infrastructure construction,” noting, “The entire economy, consumption and corporate earnings growth all depend heavily on the expansion of AI infrastructure.”
These concerns led to a sharp market sell-off. The Nasdaq Composite plunged 5% that day, falling at least 11% from its all-time high last month. The iShares Semiconductor ETF dropped 11%, its biggest decline since March 2020. The Dow Jones Industrial Average also fell more than 1,600 points.
Some on Wall Street, however, counter that it is too early to talk about the end of the AI investment boom.
Rob Sechan, founder of NewEdge Capital Group, stressed, “It has simply become more difficult to build AI infrastructure,” adding, “The harder it becomes to build new facilities, the more valuable existing facilities become.” Citing the fact that Microsoft Azure’s growth rate reached 48% in its most recent quarter, he said the AI industry was facing supply constraints, not a lack of demand.
Larry Adam, CIO of Raymond James, also viewed the sell-off as an investment opportunity. “If you take a long-term view, valuations at current levels will prove to have been a good buying opportunity,” he said, urging investors to focus on companies’ fundamentals.


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