Last week's turmoil in hyperscaler and neocloud stocks suggests investors increasingly see Democrats' push to regulate data center buildouts as a possible precursor to broader moratoriums early next year. Democrats spent much of the midterm election cycle supporting nationwide construction pauses and tighter AI oversight, while Anthropic CEO Dario Amodei's AI doom warnings reinforced that political narrative.
By the end of the week, that uncertainty weighed heavily on AI stocks as unpleasant developments for bulls emerged.
We reported Friday afternoon that Microsoft was winding down its agreement to rent AI cloud capacity from Oracle. A separate report Thursday said ING was seeking to sell roughly $500 million in data center loans, while The Wall Street Journal reported that OpenAI was discussing revisions to its 2027 capacity plans.
Friday morning also brought another ominous signal that expectations and forward estimates were about to be tampered down. Bloomberg reported that the pre-IPO valuations for Anthropic's big market debut next week had been lowered to between $1.2 trillion and $1.3 trillion, with a figure as low as $1.1 trillion.
The biggest threat to the AI buildout, as we have outlined, is on the state level: 41% of planned data center development is concentrated in states and localities shifting toward Democratic control.
That threat of tighter permitting requirements and construction moratoriums jeopardizes the buildout phase, as more unraveling may be nearing.
Early Friday, Musk claimed on X that "SoftBank is defaulting on their turbine orders," adding to even more AI bubble concerns surrounding the Japanese conglomerate led by CEO Masayoshi Son. However, Musk provided no evidence of a default.
SoftBank's planned Ohio data-center buildout includes 9.2 gigawatts of new natural gas-fired power generation. In May, an SB Energy spokesperson said SoftBank had reserved enough turbines from multiple suppliers, including GE Vernova.
The first 800 megawatts of capacity for OpenAI in Ohio are expected to come online in 2028. Construction delays could defer rental income and expose SB Energy to contractual damages or lease termination rights. Notably, Musk did not link his claim to the Ohio project.
But the market already sees SoftBank's risks materializing, with investors rushing to insure its debt. Its five-year credit default swap spread surged to 466 basis points Friday, its widest since October 2022.
SoftBank's total investment in OpenAI reached $64.6 billion in October. Musk previously questioned the financing behind the $500 billion Stargate initiative when it was announced in early 2025, prompting a public response from OpenAI CEO Sam Altman.
Any further unwinding of the AI bubble could ease turbine supply constraints if developers cancel or defer orders, potentially freeing up supplies, with some customers facing delivery backlogs stretching into 2030.