Yesterday we walked through Morgan Stanley's dollar-by-dollar map of AI's $1.6 trillion 2027 capex bill, then asked who is going to finance it. Both pieces assume the money actually gets spent. The last part of the report (available to pro subs) asks what happens if it doesn't.
MS's public policy strategist Ariana Salvatore frames the main constraints on the AI infrastructure story as "people, power, and politics," and the downside section works through all three. Spoiler alert: the bank still expects the buildout to happen, just with a growing list of asterisks attached.
The Midterm Wedge
Salvatore doesn't mince words:
Political pushback, to be sure, has become the wedge issue in the midterm elections, which we think can present a catalyst with respect to this issue and broader AI sentiment.
Her framing has three key pieces:
- No federal pause. Given the national-security framing and a likely presidential veto of restrictive legislation, MS doesn't expect Washington to stop the buildout. Instead, she sees the midterms laying "the groundwork for potential legislation toward that end in 2029."
- The binding levers are local. Interconnection, large-load rate design, siting, permitting and tax abatements are all decided at the state level, "which is why governors and utility commissions matter more than Sen
