Ready or not, the mid-term elections are now about six weeks away. Although we probably say this every two years, this year seems like a big one, with some pivotal issues at play, including the Iran war, affordability issues, and everything surrounding artificial intelligence (AI). Although recent mid-term elections have shown how hard it is to predict outcomes, and polling seems less reliable these days, the Democrats have a strong chance of flipping both the U.S.
House of Representatives and the Senate. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » As of this writing, Polymarket places the odds of a Democratic sweep at 60%. If the Democrats do sweep, I think the No. 1 trade would likely be to short sell AI data center companies, meaning investors would profit if their share prices fall.
Whether it was rogue agents from OpenAI hacking into Hugging Face or former Anthropic AI researcher Jacob Coxon warning the public that AI could lead to human extinction, there has certainly been a growing movement to regulate AI or install some kind of guardrails. Historically, the government has been slow to regulate new technologies, such as ride-sharing, social media, or crypto. There is also a divide over AI regulation, as the U.S. doesn't want to fall behind other countries, such as China.
But AI is also moving faster than any technology ever has, so I do think a Democratic-controlled Congress could move more quickly to adopt regulations. The low-hanging fruit is likely data centers, which are key to powering AI and have become unpopular among the public. Democrats have already taken action to ban or make it harder to build data centers.
New York Governor Kathy Hochul instituted a statewide ban on data centers for up to one year in order to allow time for the state to implement a regulatory framework. There have also been efforts in Congress to introduce legislation to slow the development of data centers. Recently, Politico reported that a group of Democrats proposed a bill to prevent data centers from taking advantage of certain tax breaks, such as bonus depreciation or benefits from building in Opportunity Zones.
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