People are overreacting to the risk facing neocloud businesses(IREN, CRWV, NBIS). Even though Democrats may impose more restrictions on AI data center builds, they won’t kill this once-in-a-blue-moon golden goose.
Demand Is Global, and Supply Will Follow
AI has only just begun to grow tremendously, and the demand is global. Building supply to meet high demand is basic economics. Restrictions may slow or reshape that buildout, but they can’t make the demand disappear.
The Economy Is Leaning on AI
During this period of high inflation, the AI industry has been carrying the economy and is expected to deliver high GDP growth. If Democrats kill this momentum, the U.S. would fall behind China in technology. A falling GDP could bring a recession, and if inflation stays high, even stagflation.
The stakes go beyond tech investors. The top five tech giants now make up nearly 30% of the S&P 500, so anyone holding an index fund is already exposed to the AI boom. One report found that at least 8% to 10% of U.S. pension assets are allocated to AI companies, and actual exposure through private markets and externally managed investments is probably much higher. S&P has warned that rising debt-funded spending, complex financing, and concentration risks could amplify market stress if returns disappoint. If the AI boom were choked off, the heavy debt invested in AI infrastructure could turn into major losses, and ordinary retirees would feel it in their pension and 401(k) balances.
Why Killing the Boom Makes No Sense
Democrats have just taken power back from Trump, so would they really want to make the situation worse? I don’t think so.
A Better Path
If I were in power, I would negotiate and find a way to:
- Keep the world lead in the AI boom
- Finish the war
- Lower gas prices and inflation
- Ultimately lower interest rates
That would solve all the issues instead of killing the golden goose.
Let’s be rational.
About Neocloud
Neocloud businesses are specialized cloud providers built around GPU computing for AI workloads. Unlike traditional cloud giants, they focus on renting out high-performance AI infrastructure to companies that need it quickly. That is why names like CoreWeave and Nebius have drawn so much attention from investors. Their growth depends on data center buildouts, financing, and chip supply, which is exactly why new restrictions feel threatening. Still, demand for AI compute keeps climbing, and as I covered in Nvidia’s view on neocloud demand, the real question is how companies fund and manage that growth, not whether the demand exists.
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