Morgan Stanley still has more than $1 trillion of hyperscaler capital spending penciled in for next year, and the revolt against data centers in the towns that host them has not changed the number.
Utility bills, water use and construction in residential neighborhoods have turned local opposition bipartisan, and governors in both parties have shifted position because of it. Ariana Salvatore's read is that the money still gets spent, later and in different places.
"We think it's likely that the capex story is still intact. We're still very constructive. We have over $1 trillion in capex from the hyperscalers next year."
Salvatore is Morgan Stanley's head of U.S. public policy research and published a note on the data-center opposition the morning this aired.
I listened to the full segment so you can skip it.
Here are the 5 takeaways that matter.
👤 Guest: Ariana Salvatore, Morgan Stanley's head of U.S. public policy research, who published a note on the political backlash against data centers the morning of this segment
📰 Published: 1 September 2026 on YouTube (CNBC Television)
🔴 YouTube | 🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 4 min
Key Takeaways
Three separate complaints are driving the opposition, and only one of them is environmental Utility bills, water use and construction in residential neighborhoods
The spending forecast does not change; the timing and the map do Morgan Stanley still carries over $1 trillion of hyperscaler capital spending for next year
Restrictions are coming from Republican and Democratic states alike Governors Greg Abbott and Josh Shapiro have both moved, which Salvatore reads as a measure of how strong the opposition is
Governor races decide more about the build-out than Senate races do She named Ohio, Texas, Pennsylvania and New York
Neither election result changes the fiscal path much, because the tax cuts are already law The one live risk she sees for a sector is Democratic pushback on SNAP and Medicaid cuts, which would reach health care stocks
1. Three sources of pushback
The host opened on whether the backlash is talk or something that slows the build-out, noting that opposition to data centers has become powerful and bipartisan quickly and that politicians are listening. Salvatore separated the complaint into three parts before answering.
The first is price, and it reaches every household on the grid. Consumers are pushing back against their utility bills going up
The second is environmental, and water is the specific grievance. "Water usage is a big complaint among local communities."
The third is simply what a construction site does to a neighborhood. "No one likes to see large scale construction in their neighborhoods."
2. Capex intact but conditional
Asked what that means for the pace of construction, Salvatore did not cut the spending number. She changed its shape.
The forecast stands. "We think it's likely that the capex story is still intact. We're still very constructive. We have over $1 trillion in capex from the hyperscalers next year."
What changes is where and when, not how much. "We just think it's more likely to be conditional. So that means in certain regions maybe it takes longer. There's timing delays, geographical dispersion."
She described the overall story as pretty robust
3. Both parties are restricting
The host put a market observation to her: "I noted today, Renaissance Macro plotted the sort of AI leveraged stocks seeming to move somewhat in concert with the Polymarket probabilities of the republicans holding the Senate." His reading of it was that investors think Democrats would be more hostile to data-center construction. Salvatore's answer was that the split does not run along party lines at all.
She said the restrictions are appearing in both parties' states. "You are seeing these sorts of policy restrictions in both democrat held states and also republican held states." "The politics of this are very messy."
Two governors moving is her evidence for how strong the opposition is. "You saw governors, even Abbott and Shapiro are two notable examples where there's been a pivot." She called the shift a hat tip to the magnitude of the opposition
4. Governorships, not Senate
Salvatore expects this to be decided in state and local races rather than federal ones. There is an opposition debate in Senate races — she used Ohio as the example — but "The much more relevant seats, we think are the governorships."
The states she is watching are the ones with the capacity. "A few just quick examples would be Ohio, Texas, Pennsylvania, New York, less relevant just given the total capacity in the state."
5. The fiscal path is intact
The host asked whether Republicans have a policy agenda at risk if either chamber of Congress changes hands, and raised the usual pattern of market weakness around midterms. Salvatore split the answer by asset class.
For a bond investor, she said, the answer is that almost nothing changes. Salvatore said that "we think the fiscal trajectory is largely intact regardless of the election outcome" "That's because many of the large tax cuts and changes that republicans wanted to do, they did when Trump was first elected." Those changes, in her phrase, cleared the docket
The exception she named is a spending fight with a sector attached to it. She sees scope for Democrats, in the right circumstances, to push back on impending SNAP and Medicaid cuts — cuts that would affect consumers and health care stocks
Which policies are in question, rather than which party wins, is what decides the answer
Bonus Insights
Divided government does not automatically mean fiscal restraint. The host asked whether "So we're not necessarily looking at divided government means gridlock means fiscal restraint necessarily." Salvatore's answer was "Not necessarily"
The president can act without Congress, and Salvatore said that is the part to watch. She flagged "One other really important thing here is to mention what is still in president Trump's control," and listed tariffs, immigration restrictions and the deregulation agenda as tools already in use
Salvatore's bottom line is that the opposition to data centers is real enough to move governors in both parties, and that it reschedules and relocates the build-out rather than shrinking it.
Products, Companies & Tools Mentioned
Morgan Stanley (Salvatore's firm, which carries over $1 trillion of hyperscaler capital spending for next year and calls the story conditional rather than at risk)
Renaissance Macro Research (The host cited its chart showing AI-levered stocks moving with the odds on Senate control)
Polymarket (The source of the Senate probabilities in that chart)
Books & Resources Mentioned
Morgan Stanley's note on the political opposition to data centers (Salvatore's own note, published the morning of the segment, which the whole conversation runs off)
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