Wall Street spent election night bracing for a selloff.

As Democrats swept both the House and Senate, S&P 500 futures plunged 1.4%, while Nasdaq-100 futures dropped as much as 2.4%.

But by the opening bell, stocks had reversed course. The S&P 500 opened more than 1% higher, and the Dow jumped nearly 1,000 points.

But while the broader market rallied, one group of stocks was getting hammered: AI data center operators.

IREN (IREN), Hut 8 (HUT), Applied Digital (APLD), and Core Scientific (CORZ) fell between 1.2% and 13%.

And that divergence could tell us something important about where the next opportunities in AI are emerging.

Here’s why the election could create a new dividing line between the winners and losers of the AI infrastructure boom.

The growing backlash against AI data centers

For the past few years, tech companies have been racing to build the infrastructure needed to power artificial intelligence. And all of those facilities need enormous amounts of electricity.

The problem is that communities across the country are increasingly pushing back against new developments. Residents are worried about higher utility bills, strained power grids, water consumption, and the impact of industrial-scale facilities on their neighborhoods.

And those concerns are becoming a political force.

According to NBC News exit polling cited by RBC Capital Markets, 76% of voters opposed building a new data center in their community.

That’s an enormous amount of opposition to an industry that’s expected to drive hundreds of billions of dollars in investment.

And Tuesday’s election could give that opposition more influence. Democrats made gains in major data center states, including Texas and Georgia, where concerns about the industry’s rapid expansion have been growing.

Goldman Sachs economists estimate that Democratic victories could lead to temporary restrictions on new data center construction, affecting roughly 45% of planned U.S. capacity expansion.

In other words, nearly half of the industry’s growth could be exposed to political delays.

And for investors, those delays could have major consequences.

Why the backlash could create new AI winners

The demand for AI computing power hasn’t disappeared. Big Tech is still spending enormous sums to expand its AI capabilities. And the industry is already struggling to secure enough electricity and infrastructure to meet its ambitions.

But what happens if governments make it harder to build new facilities?

That could make existing, approved infrastructure increasingly valuable.

It’s a basic supply-and-demand equation: If companies need more computing capacity, but bringing new capacity online becomes harder, facilities that are already operating—or ready to expand—could command a premium.

And that could create a major competitive advantage for companies that got ahead of the permitting and power challenges.

How to separate the winners from the losers

Of course, that doesn’t mean every company with an existing data center is automatically a winner.

Investors still need to pay attention to how these businesses are valued… how much debt they’re carrying… and whether they can actually deliver on their growth plans.

Many AI infrastructure stocks have already come under pressure as investors question whether the industry’s enormous spending will generate attractive returns.

The election adds another risk to consider.

A company might own valuable infrastructure today, but if its valuation assumes it can rapidly double or triple its capacity, permitting delays could still be a serious problem.

That’s why we believe investors should pay especially close attention to three things:

1. Access to electricity. Does the company have firm power agreements and a realistic timeline for connecting its facilities to the grid? Or is it still waiting for utilities to deliver the electricity it needs?
2. Permits and construction progress. Are its facilities already operating or approved for expansion? Or is management counting on projects that could face local opposition?
3. Financing and customer demand. Does the company have the capital to complete its expansion and customers willing to pay for the capacity? Or is its growth story dependent on raising more money and securing contracts down the road?

These questions were already important before the election. But as political opposition grows, they could become even more critical to determining which AI infrastructure companies succeed.

The bottom line

The midterm results haven’t changed the long-term demand for AI. Companies still need more computing power. And delivering that capacity will require enormous investments in data centers, electricity, and supporting infrastructure.

But the election highlighted a growing obstacle: Getting new projects approved could become increasingly difficult.

That could slow the industry’s expansion and make existing infrastructure more valuable. For investors, the opportunity is to look beyond how much capacity a company “plans” to build… and focus on how much it can realistically bring online.

As the AI boom continues, the ability to deliver computing capacity could become one of the industry’s biggest competitive advantages.

For more on how the midterm results could reshape the market—and how we’re positioning our portfolios—check out Curzio Alpha.