Behind the Curtain: The new existential threat to AI
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Forget energy. Forget chips. Forget China. The most clear and present danger to AI and any AI-related economic boom is rapidly rising public opposition to U.S. data centers.
Why it matters: Republicans and AI CEOs are in full panic mode watching politicians and the public turn on the physical engines of AI growth. In private, they tell us they can't find a compelling message to shift opinion fast enough.
Their nightmare — a political and economic daisy chain that cripples the AI revolution — is already taking shape:
- Voters revolt against data centers over electricity bills, water use, giant warehouse-like developments and fears about AI eliminating jobs.
- Democrats race to capitalize, competing to impose tougher restrictions or block projects altogether.
- Republicans — watching candidates get punished in places like Ohio — retreat from an industry they've spent years championing.
- The pipeline of new data centers slows, constraining the computing power AI companies need to keep improving their models and products.
- Investors question the staggering spending, borrowing and valuations built on expectations of relentless AI growth.
Zoom out: The AI boom has become dangerously intertwined with the U.S. economy, meaning this will ricochet far beyond Silicon Valley.
- Goldman Sachs estimates U.S. AI investment will hit about $600 billion this year, equal to roughly 2% of GDP and 10% of business fixed investment.
- Big Tech has already locked itself into trillions of dollars in future spending: The Financial Times found six hyperscalers have nearly $1.5 trillion in purchase commitments, much of it tied to AI infrastructure, plus roughly $1.5 trillion in lease obligations. Even the richest companies in history are now turning to debt markets to bankroll the buildout.
- A handful of those AI-heavy tech giants dominate the stock market's gains, swelling the portfolios of wealthy Americans who account for an outsized share of consumer spending.
The big picture: The increasingly toxic politics of data centers are surfacing in several of this fall's governors' races.
- Pennsylvania Gov. Josh Shapiro (D), a 2028 presidential hopeful, had welcomed data centers as an economic-development boon, boasting last year that an Amazon plan to build $20 billion in AI infrastructure was the "largest private sector investment in the history of Pennsylvania."
- On Tuesday, Shapiro, whose Republican opponent in November is campaigning on halting data-center development, went from AI cheerleader to critic and signed an executive order imposing stringent new requirements for data-center developers.
- Speaking at the state Capitol, Shapiro slammed "predatory developers" for trying to bully local officials and ram through dozens of data-center projects in Pennsylvania.
- Shapiro's new restrictions cover energy affordability, community engagement, workforce and economic development, transparency and environmental protection, and give local municipalities "a greater say over development in their communities."
The intrigue: In Wisconsin, GOP gubernatorial nominee Tom Tiffany — a close Trump ally — is running ads attacking his Democratic opponent for suggesting the state could become an AI data hub "for the entire globe."
- It's a striking crack in Trump's pro-AI coalition, as Republicans in swing states scramble to get on the right side of the new populist wave upending the midterms.
The other side: OpenAI is aggressively courting state and local officials to try to persuade them of the economic benefits of data centers. Chris Lehane, OpenAI's chief global affairs officer, told us: "As the late, great Tip O'Neill famously said, 'All politics is local.'"
- "That is especially true of AI data centers, where you have to show up, listen, and directly respond with specifics to the concerns of locals," Lehane added. "You have to answer the mail on issues like electricity and water, while also demonstrating a seriousness of purpose when it comes to ensuring the community gets a good deal. ... That is democracy in action."
- Meta last week announced its Future Is for Everyone Fund, with $1 billion in spending planned to benefit teachers, law enforcement and fire departments in communities where the company owns or plans data centers. Meta is also aggressively highlighting direct economic benefits for localities, including thousands of jobs and an increased tax base.
By the numbers: In Pew Research Center polling published Tuesday, 52% of Americans said they're "more concerned than excited" about increased use of AI in daily life — up from 37% in 2021.
- Even adults under 30 have soured on AI, with 55% now saying they're more concerned than excited — mainly because of fears the technology will take jobs. Excitement has faded across all age groups over the past five years, Pew found.
- A June Echelon Insights poll found AI data centers are uniquely toxic: Just 27% of voters say they would support building one in their community, dead last among the projects tested — including a nuclear power plant.
Axios' Zachary Basu and Alex Thompson contributed reporting.
- Go deeper: "AI optimism fades among young adults," by Axios' Josephine Walker.
