4.Behind the Curtain: The new existential threat to AI

Behind the Curtain: The new existential threat to AI. Add Axios as your preferred source to.

Key points

• AI investment will hit regarding $600 billion this year, equal to roughly 2% of GDP and 10% of business fixed investment.
• Even adults under 30 have soured on AI, with 55% now saying they're more concerned than excited – mainly since of fears the technology will take jobs.
• Speaking at the state Capitol, Shapiro slammed "predatory developers" for trying to bully local authorities and ram through dozens of data-center projects in Pennsylvania.
• Republicans – watching candidates obtain punished in places like Ohio – retreat from an industry they've spent years championing.
• Zoom out: The AI boom has become dangerously intertwined with the U.S.

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 employ, giant warehouse-like developments and fears concerning AI eliminating jobs.

Democrats race to capitalize, competing to impose tougher restrictions or block projects altogether.

Meanwhile, the pipeline of new data centers slows, constraining the computing power AI firms need to keep improving their models and products.

Investors question the staggering spending, borrowing and valuations built on expectations of relentless AI expansion.

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 regarding $600 billion this year, equal to roughly 2% of GDP and 10% of business fixed investment.

Major Tech has already locked itself into trillions of dollars in future spending: The Financial Times identified six hyperscalers have almost $1.5 trillion in purchase commitments, much of it tied to AI infrastructure, plus roughly $1.5 trillion in lease obligations. Even the richest firms in history are now turning to debt markets to bankroll the buildout.

Meanwhile, 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.

Notably, the major picture: The increasingly toxic politics of data centers are surfacing in a number of 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.

Shapiro's new restrictions cover energy affordability, community engagement, workforce and economic development, transparency and environmental protection, and offer local municipalities "a greater say over development in their communities."

In practice, 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."

As Republicans in swing states scramble to obtain on the right side of the new populist wave upending the midterms, it's a striking crack in Trump's pro-AI coalition.

In practice, the other side: OpenAI is aggressively courting state and local authorities to try to persuade them of the economic benefits of data centers. Chris Lehane, OpenAI's chief global affairs officer, informed 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 continued. While additionally demonstrating a seriousness of purpose when it comes to ensuring the community gets a good accord, "You have to answer the mail on problems like electricity and water. That is democracy in action."

Meta last week confirmed its Future Is for Everyone Fund, with $1 billion in spending planned to benefit teachers, law enforcement and fire departments in communities where the business owns or intends data centers. Meta is additionally aggressively highlighting direct economic benefits for localities, including thousands of jobs and an climbed tax base.

By the numbers: In Pew Research Center polling published Tuesday, 52% of Americans remarked they're "more concerned than excited" concerning rose apply 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 since of fears the technology will take jobs. Excitement has faded throughout all age groups over the past five years, Pew identified.

In practice, a June Echelon Insights poll discovered AI data centers are uniquely toxic: Just 27% of voters say they would backing 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.

For now, 4.Behind the Curtain: The new existential threat to AI remains the part of the story worth watching, and further updates are likely as more details are confirmed.