Egan-Jones: Both Parties Likely to Keep Backing the AI Buildout
Credit rating agency Egan-Jones expects the mainstream of both US political parties to keep supporting the artificial intelligence buildout, even as the public turns against local data centers. In a new commentary, the firm says the industry should expect higher costs and slower permits, not a halt.
- Egan-Jones expects the mainstream of both US parties to keep backing the AI buildout despite public opposition to local data centers.
- Gallup finds 71% of Americans oppose a local AI data center, versus 53% for a nuclear plant.
- The House passed a data center power-cost bill 417 to 3 on September 16, without limiting how many data centers get built.
- Egan-Jones sees utilities positively, hyperscalers slightly negatively, and Oracle, lenders and smaller developers negatively.
- $68 billion of smaller developers' projects were delayed or canceled last quarter, according to the commentary.
Public opposition, political support
Egan-Jones released the commentary to give investors a framework for the political risk tied to AI infrastructure. The firm notes that the four largest hyperscalers are planning more than $700 billion of capital spending this year.
Opposition among the public is measurable. According to Gallup, 71% of Americans oppose a local AI data center, compared with 53% for a nuclear plant. Egan-Jones argues this has not changed the stance of party mainstreams, and it draws a parallel with drug makers. Those companies have stayed unpopular for years yet kept the backing of both parties, while leading all other industries in federal lobbying almost every quarter since 2010.
Money also plays a role at the ballot box. The pro-AI super PAC network Leading the Future has raised $140 million for the midterms, according to the commentary.
What the House vote shows
Egan-Jones points to a September 16 House vote as an illustration of the pattern. Members passed, by 417 to 3, a bill pushing states to make large data centers pay for the power lines and plants built to serve them. In the firm's reading, the bill answers complaints about power bills without limiting how many data centers get built.
The firm expects the populist wings of both parties, not the mainstream, to lead any push to halt the buildout.
Pressure is more direct at the state level. The commentary cites Texas, which has frozen new data center grid approvals and permits. It also mentions new laws in California and Florida that shift grid costs onto operators or protect residents from paying for data centers' power.
Credit implications
Egan-Jones sets out how the shift affects different parts of the market:
- Utilities: viewed as positive, because they face less risk of being left with the bill if a project is canceled.
- Largest hyperscalers: a slightly negative effect from higher hookup costs and longer waits, funded partly with debt.
- Oracle and lenders: the assessment is negative.
- Smaller data center developers: most at risk, with $68 billion of projects delayed or canceled last quarter.
What it means for investors
Egan-Jones concludes that the industry faces higher costs and slower permits, while the money involved keeps the mainstream of both parties behind AI growth. Calling the buildout perhaps the fastest industrial buildout in world history, the commentary finds that institutional investors must pay attention.
For investors, the message is that political risk is more likely to show up as added expense and delay, especially at the state level, than as a national stop to construction. The firm, an NRSRO founded in 1995, offers credit ratings and proxy services.
PR Newswire: Egan-Jones Expects Both Parties to Keep Backing the AI Buildout
