Good morning. If the initial focus after the US midterms was on the power shift in Washington, Thursday’s market rout brought attention back to state and local-level results.

On Tuesday, data centres were on 47 ballot measures across 10 states. They lost 46 times. In Ohio alone there were 15 measures to ban, slow or cap the size of their development. Politically, data centres are more toxic than a nuclear reactor: in a March Gallup poll, 71 per cent of Americans opposed building an AI data centre in their area, compared with 53 per cent for a nuclear power plant.

It would be too much to blame the data centre measures alone for Thursday’s tech sell-off. Investors are perfectly capable of generating their own anxieties about the AI trade. But the results highlight that, in the years ahead, local opposition may be a greater constraint on the AI boom than federal action. Goldman Sachs estimates that short-term moratoriums could affect 45 per cent of planned US data centre expansion.

Some investors see a silver lining. Companies that already have spare computing capacity could see their value rise. A slowdown in the data centre build-out could also be a good thing for an overheating economy. If demand cools, it could ease inflationary pressure on electricity and other inputs, and remove the need for the Federal Reserve to further tighten policy.

The harder question is for chipmakers. Until this week, they looked like the “picks and shovels” of the AI trade — the way to make money without having to bet on which AI model maker would win. That logic assumed demand from data centre projects was a sure thing. Voters have shown that it isn’t.

Send us your thoughts: unhedged@ft.com.

Why this ad?

Hakyung: “History just needed saving” (New Yorker)

Rob: It’s going to be a strange couple of years (Politico)

Daire: “Dr Amodei wore a panda head to the wedding” (NYT)