While the midterm election results sent a clear message that voters have concerns about the rapid data center build-out, it appears the industry's construction pipeline is still on track — at least for next year.
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New research from J.P. Morgan Asset Management and comments from CoreWeave leadership in the wake of its unexpectedly strong third-quarter earnings report point to a positive outlook for development in 2027, even if the sector is ultimately expected to lose steam in 2028.
“We do not anticipate any impact from the seismic regulatory shift that’s occurred,” CoreWeave CEO Michael Intrator said during the firm’s Tuesday afternoon earnings call. “We are very comfortable with our pipeline. ... We believe that what has occurred is a statement around how you build. We want to build responsibly.”
“So we think that is an opportunity for us to continue to scale our business within the new political reality that exists,” he added.
The AI firm's stock had plunged last week after anti-data center candidates swept the midterms, but it has been rallying since then, including a more than 26% jump since the earnings report was released Tuesday.
CoreWeave reported $3.66B in quarterly revenue, up 168% year-over-year and beating industry estimates of $3.56B. It has also raised its full-year revenue guidance.
The bullish outlook aligns with a projection from J.P. Morgan, which expects artificial intelligence-related capital expenditures to reach $1.5T in 2027 and level off in the following year due to political pushback, Semafor reported.
J.P. Morgan researchers said in the report that the legislative pushback to data center construction has “more bark than bite.” Of the 16 statewide moratoriums that have been proposed, just one in New York has become law.
The report also found that weeding out speculative projects could be good for the industry. It said of the 430 gigawatts worth of proposed data center projects, just 59% are in active development.
“Projects already under construction are generally less vulnerable to new restrictions,” J.P. Morgan Global Market Strategist Stephanie Aliaga wrote.
“Future developments face greater uncertainty around permitting, power availability and financing, with delays and higher costs potentially pressuring returns.”
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