LIVE MARKETS-Democratic midterm sweep could be bad for AI, good for healthcare, EPFR says

By Reuters News

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DEMOCRATIC MIDTERM SWEEP COULD BE BAD FOR AI, GOOD FOR HEALTHCARE, EPFR SAYS

Investors are worried that a Democratic sweep in next month's US midterm elections could be a headwind for artificial intelligence and the data center sector but could be supportive for healthcare and infrastructure, according to EPFR.

A Democratic "blue wave" is viewed by some investors as a potential headwind for AI-related companies and data center operators, which could face stricter environmental requirements, greater local opposition to projects and proposals requiring developers to shoulder more of their power-related costs. A Republican-controlled Congress, by contrast, is generally seen as more supportive of rapid AI deployment and data center expansion, EPFR said.

Still, EPFR fund flows data suggests investor enthusiasm for AI and data centers remains intact. Its data centers & AI infrastructure funds attracted inflows for the 12th time in the past 13 weeks and for the 27th time in the past 32 weeks. AI-focused funds saw inflows in 26 of the past 27 weeks as AI companies continued to support the broader US stock market.

The prospect of Democratic gains highlights sectors that could benefit from increased government support, including healthcare, infrastructure and clean energy, according to EPFR. Democrats have traditionally backed healthcare spending as well as large-scale infrastructure projects, including public transit, power-grid modernization, and renewable-energy facilities.

However, investors have yet to embrace clean-energy funds, according to EPFR data. Its clean energy funds recorded their 17th outflow in the past 20 weeks, with redemptions rising to an 11-week high. Electric vehicle funds posted outflows for the 16th time in 24 weeks, with redemptions hitting a 37-week high.

(Chibuike Oguh)

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