Wall Street has rewarded investors in 2026, but they’ve questioned the durability of those gains.
Through Sept. 1, the S&P 500 shot up 11.5% year-to-date, the Nasdaq Composite 12.3%, the Dow 9.8%, and the Russell 2000 17.7%. Yet the Nasdaq entered a correction in March as the Iran war drove oil higher, markets rebounded to August records, and September opened with another sell-off.
That said, Morgan Stanley’s head of U.S. public-policy research, Ariana Salvatore, in a CNBC interview, just delivered a pointed message for worried AI stock investors.
The concerns around the AI buildout have shifted beyond chip demand and valuations. Communities are resisting data centers that underpin AI due to higher electricity bills, heavy water consumption, construction-related disruptions, and pressure on strained energy grids.
That tremendous resistance has translated into audits, stricter permitting, and demands that tech companies finance their own infrastructure.
Salvatore doesn’t dismiss the political threat. Instead, her conclusion draws an important distinction between what the backlash might disrupt and what investors may be prematurely writing off.
Morgan Stanley sees AI spending surviving the political squeeze
Salvatore began by breaking down the issue at hand for AI stock investors.
“So it’s remarkable how quickly the public opposition to data centers has become powerful and bipartisan, and politicians are listening.”
She identified three major pressure points: higher utility bills, environmental concerns, including water consumption, and quality-of-life disruption from construction projects.
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That said, she believes the political risk is mostly local rather than ideological at this point. The pushback is emerging in Republican- and Democrat-led states, while governors such as Greg Abbott and Josh Shapiro have turned toward tougher oversight.
Yet she isn’t interpreting that resistance as the end of the AI investment cycle. “We think it’s likely that the CapEx story is still intact. We’re still very constructive,” Salvatore said. “We have over a trillion dollars in CapEx from the hyperscalers next year.”
The big differentiator will be timing. “We just think it’s more likely to be conditional,” she said, underscoring “timing delays” and “geographical dispersion.”
In practice, hyperscalers could preserve their overall budgets by postponing projects in politically sensitive regions and redirecting capacity toward areas with greater energy, water, and public support.
