• THE GRID
The Peak Call
I was reading Jefferies' latest note Friday when one line stopped me cold.
"The AI capex cycle may have peaked, or at least commenced a mid-cycle correction."
Four companies — Microsoft, Amazon, Alphabet, and Meta — spent $202 billion last quarter. Up 108% from a year ago. That's a pace of roughly $808 billion a year.
And a major bank says the peak is in.
Last Tuesday, voters rejected data centers in 40 of 41 ballot measures. Democrats swept Congress.
Incoming governors in Texas and Ohio ran on data center moratoriums. Texas alone holds about 25% of planned U.S. capacity.
Two days later, Meta's president stood on stage at the WSJ Tech conference in Napa. She said what few executives will say out loud.
"To start new data center build-outs today in the United States will be very challenging."
She told the audience about a call with a newly elected governor. That governor had run against data centers. Once the race was over, the tone shifted. "We don't want these jobs to go elsewhere," the governor told Meta.
Wanting the jobs but not the buildings. That's the new political reality.
The market didn't wait. Thursday was the worst session since April 2025. The Magnificent Seven shed $1.03 trillion in a single day.
Nebius dropped 15%. Iren fell 17%. CoreWeave lost 10%.
Q3 Capex $202B |
YoY Change +108% |
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AI % of GDP Growth 67% |
US Capacity at Risk 45% |
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The 2027 Street consensus puts combined capex at $1.04 trillion. That's 29% above the current run rate. Jefferies doesn't think they'll reach it.
Financing costs are climbing. Returns remain unproven. And the political map just got redrawn.
Goldman Sachs warns states likely to restrict data centers hold 45% of planned U.S. capacity. That's nearly half the pipeline.
This isn't just an American story. Last weekend, over 100 groups protested in 15 European countries. In Amsterdam, demonstrators broke into a Microsoft construction site. They climbed a crane. They clashed with police.
Meta had floated building overseas. That exit is narrowing fast.
Into this walks Anthropic, targeting a mid-November IPO. Its S-1 lists $895 billion in infrastructure commitments. Nearly all of it needs data centers built. In places where voters just said no.
One number from the Jefferies note deserves more weight. AI capex drove 67% of U.S. GDP growth over the past year. If spending stalls, it's not a tech correction. It's a drag on the whole economy.
McCormick told the crowd that securing computing power takes 80% of her time. Not building products. Not ad revenue. Compute.
When the president of a trillion-dollar company spends four out of five days hunting for compute, infrastructure isn't a footnote. It is the entire investment thesis.
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• RESISTANCE
The $29 Billion Tab
A line in a Dallas Fed working paper caught my eye. The paper was revised in October. One new estimate changes the whole argument.
Data centers raised U.S. wholesale electricity prices by 6.9%. Nationally. Through 2025.
That's not just Virginia. Not just the PJM corridor. The whole country felt it.
Then PJM's independent market monitor put a dollar sign on it. Its July report estimated that data center load added $29.4 billion in extra capacity charges across the last four auctions.
That's the cost the grid wouldn't have if the data centers weren't there.
$29.4 billion in PJM capacity charges are tied to data center load, per Monitoring Analytics (July 2026). Residential electricity prices nationally have risen over 10% since 2024, per the EIA.
These aren't forecasts. These are bills that already arrived.
The policy response is speeding up. FERC's large-load rulemaking — launched in June with show-cause orders to six grid operators — has compliance filings due this month. Those filings will set the rules for how data centers connect and who pays.
States aren't waiting. Oklahoma passed the Data Center Consumer Ratepayer Protection Act, effective July 2026. Oregon's PUC raised data center rates 29.7% while cutting residential rates by 1.3%.
Grid Strategies ran the numbers on the pending federal bill. Under its provisions, data centers could pay $55 billion in transmission costs over the next decade.
Forty of 41 ballot measures didn't pass in a vacuum. They passed because the price tag showed up first.
• BLACKOUT WATCH
Nowhere to Build
Everyone sees the sell-off. Not everyone sees what's behind it.
Europe won't be the escape hatch. Meta's president talked openly about building abroad to avoid U.S. friction. Then last weekend, over 100 groups joined "Stop Dirty Data Centres" protests in 15 countries. In Amsterdam, they broke into a Microsoft construction site, climbing a crane and clashing with police. Ireland, the Netherlands, Denmark — Europe's biggest data center hubs — all saw major turnout. The overseas backup plan looks a lot like the domestic one. With even less goodwill.
The U.S. map is shrinking fast. Goldman Sachs estimates states likely to restrict data centers hold 45% of planned U.S. capacity. Texas is roughly 25% on its own. Ohio's incoming governor wants a moratorium too. Meanwhile, the four hyperscalers are spending at an $808 billion annual pace. Anthropic alone carries $895 billion in compute commitments. All that capital needs a physical home. The list of willing hosts got shorter last week.
The sell-off priced a slowdown. It hasn't priced the possibility that there's nowhere left to build.
