AI Election Backlash Is Shaping Wall Street’s Stock Market Views

Matthew Griffin

Tue, August 18, 2026 at 7:58 AM EDT 4 min read

(Bloomberg) — The backlash against artificial intelligence and the data centers needed to run it is becoming such a touchy election issue that Wall Street is being forced to factor it into its stock market recommendations.

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Last week, strategists at Bank of America Corp. told clients that a strong showing by Republicans in November’s midterms would cause US equities to “rip.” The group led by Michael Hartnett put a particular focus on the reelection of Texas Governor Greg Abbott, cautioning that if Democrats gain control of the Senate and Texas governor’s mansion it would trigger a slump of more than 10% in the stock market next year, the technical definition for a correction. That follows earlier warnings from Evercore ISI and BCA Research that a populist response to AI could spell trouble for equities.

“There is a tremendous amount of risk coming for the big AI sort of super leaders,” said Henrietta Treyz, cofounder of Veda Partners, an investment adviser and consulting firm in Bethesda, Maryland.

Polls show that opposition to building new data centers is a bipartisan issue in the US, with voters worried about their impact on the environment and electricity prices. And elected officials are starting to take notice. Governors are reassessing tax credits for data centers, while a long list of cities and counties, as well as the state of New York, have placed restrictions on their construction.

State-level AI policies will become a model for the federal government, Treyz said. While comprehensive legislative action is unlikely in the next Congress, the end of the midterm campaigns will free lawmakers to address the issue, in turn shaping investors’ views of what’s to come, she said.

That explains why BofA is so focused on the race in Texas between Abbott and Democratic State Representative Gina Hinojosa. The vote is a referendum on technology companies’ need to build out the infrastructure powering AI versus voters’ concerns about affordability, inflation and the impact of new data centers on their communities, the strategists said.

Texas is among the US states with the most operating and planned data centers. It’s also a Republican stronghold. So any action against data center construction would be a clear signal that these concerns aren’t confined to the Democratic party.