New Delhi [India], November 3 (ANI): The outcome of the US midterm elections is unlikely to disrupt the country’s artificial intelligence investment cycle, as states where Republicans are vulnerable to losing control account for only around 15 per cent of total data centre capacity, according to a report by ICICI Bank.
However, a change in congressional control could increase the risk of a government shutdown and a standoff over the debt ceiling.
The report said a Democratic victory in both chambers of Congress could lead to greater scrutiny of data centres over their high electricity and water consumption, environmental impact and employment effects. However, the concentration of data centre capacity across a limited number of states is likely to contain the impact on planned investments.
The 15 largest data centre states account for around 82 per cent of total US capacity. States governed by Republicans account for 62 per cent, while those governed by Democrats account for 38 per cent.
The three toss-up states where Republicans are at risk of losing control — Ohio, Georgia and Nevada — together account for around 13 per cent of capacity.
An average 100-megawatt data centre consumes around 2 million litres of water daily and uses more electricity than 75,000 homes, the report said.
“Even in the worst-case scenario, only ~15% of the data center capacity could come under increased scrutiny,” ICICI Bank said, adding that the election was unlikely to have a major impact on the AI capital expenditure cycle.
The elections are being held on Tuesday, November 3, with all 435 seats in the House of Representatives and 35 Senate seats up for election. Midterm elections take place halfway through a President’s four-year term and determine which party controls Congress for the next two years.
ICICI Bank identifies a Democratic sweep as the most likely outcome, assigning it a 63 per cent probability. The report cites market probabilities of 90.9 per cent for Democrats winning the House and 64 per cent for gaining control of the Senate.
A shift in congressional control could, however, complicate government funding negotiations. The existing temporary funding arrangement expires on December 11, 2026, requiring lawmakers to approve a full-year budget or another stopgap measure. Congress is scheduled to return on November 9, six days after the election.
Disagreements over spending priorities, immigration enforcement, border security and government oversight could make an agreement difficult. ICICI Bank sees a moderate probability of a partial government shutdown in late 2026 and 2027.
It noted that divided governments following midterm elections had resulted in shutdowns in two of the four previous instances, excluding a one-day funding gap in 1982.
“Shutdowns significantly lower growth rates in the affected quarter, depending on their extent and length,” the report said.
The report also flagged the possibility of a debt ceiling standoff around mid-2027. The borrowing limit was raised to USD 41.1 trillion in 2025, while outstanding US debt stood at around USD 40 trillion in late 2026. Based on current spending and revenue trends, the country is expected to reach the limit around the middle of next year.
A Democratic victory in both chambers could give the party greater leverage to seek concessions on spending, social benefits, taxes and trade policy. ICICI Bank warned that an intense standoff could raise the risk of a sovereign rating downgrade.
On trade, the report said greater congressional scrutiny of the Trump administration’s tariff decisions was possible, but a major reversal of existing measures remained unlikely.
For businesses, the immediate impact is therefore more likely to be greater policy uncertainty and delays in government funding decisions than a major shift in AI investment or trade policy.
The broader economic and geopolitical environment is expected to remain a more important driver of financial markets than the election outcome, ICICI Bank said. (ANI)
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