Dan Ives is not in the mood to sugarcoat. The morning after the 2026 midterms, the Yorkville Ives analyst made clear that the Democratic Party's wins in the House of Representatives and the Senate are a real problem for the artificial intelligence sector and the data center buildout that powers it.
"The Democratic blue tidal wave across the Senate and House was a seismic shift that will have a negative impact on the pace of the AI Revolution buildout in the US over the next few years," Ives said in a new investor note.
In plain terms: fewer data centers getting built means a slower AI Revolution. Ives called the result a "big hurdle for AI buildout" and said it will impact the AI trade.
"There is no way to sugarcoat that Democrats taking control especially over the Senate will create some major hurdles for AI and tech legislation in the Beltway over the next two years."
Trump's Veto Threat and the Negotiating Table
With President Donald Trump threatening to veto potential laws brought forth by the Democratic Party, Ives expects big tech CEOs to be forced to come to the "negotiating table" and hash out compromises with Congress on AI-related legislation.
That is the Beltway version of a traffic jam. Nobody is banning AI, but the legislative machinery that greases the skids for chip factories, power plants and server farms suddenly has a lot more friction.
Texas: The Biggest Worry for Tech Investors
Ives said Texas could be among the biggest worries for tech investors. Democrat Gina Hinojosa won the governor's race in an upset over incumbent Greg Abbott, and the analyst describes Hinojosa as a "known anti-data center politician."
"Worries around the future of the data center buildout in Texas a real issue for tech investors."
That matters because Texas has been one of the go-to destinations for hyperscalers hunting cheap land, friendly regulation and abundant power. A governor who is skeptical of data centers throws a wrench into that math.
Ives also highlights Space Exploration Technologies Corp. (NASDAQ:SPCX), or SpaceX, as a stock that will be under pressure from the election result.
And the stakes go beyond US borders. Ives said the election results and a slowdown in U.S. AI growth could help China narrow America's lead, or even move ahead.
Ives Is Still Bullish on Tech
Here is the twist: while AI growth may slow, Ives is not ready to throw in the towel on the sector.
"It does not change the overall thesis and monetization theme of the AI Revolution," Ives said.
Even if fewer data centers get built, Ives said the Street is "way underestimating" future revenue growth from AI.
"Now it will happen at a more measured pace which is likely a good thing in the eyes of many investors…and the market will digest this news and move forward."
In other words, a little political friction might cool a buildout that was starting to look like a land grab. Ives said his "tech winner list" is unchanged.
The analyst recently shared what he believes are the best AI stocks across several sub-sectors:
"Each sits where demand is contracted, funded, and accelerating, and together they give investors exposure to the AI buildout into 2027 without having to pick the winner of the application-layer shakeout," Ives recently said.
So the political map changed overnight. The AI trade, at least according to Ives, did not.
