AI Giants Grab Power as Voters Face Energy Costs

Tech companies announced tens of billions of dollars in data-center spending days before voters headed to the polls, as energy costs and data centers emerged as prominent issues in key governors’ races. The spending spree is already pulling on power supplies and public policy. Families face the energy costs built into the rush.

Who Gets to Set the Terms

Voters in Texas, Georgia, Ohio, New Mexico, Michigan and Oregon were scheduled to elect governors on Tuesday. Capstone wrote in a Thursday note to clients, “If Democrats prevail in these races, moratoriums will likely be enacted through the continuation or implementation of state environmental permitting pauses.” The ballot-box debate centers on whether states will pause permits, even as companies sign contracts and place bets worth billions.

Corporate AI spending drives U.S. economic growth, particularly in the power sector. EQT Corp. announced a $13 billion takeover of natural gas driller Range Resources. GE Vernova said it would buy power equipment maker Trench Group for $9 billion. NiSource, the parent company of an Indiana utility, is spending $40 billion on upgrades after reaching a deal to supply Microsoft with electricity for 20 years. It was NiSource’s third contract with a hyperscaler.

The Commerce Department said third-quarter growth topped expectations, thanks in large part to AI-fueled spending. Oxford Economics wrote, “The US economy has been more reliant on this tech boom for growth than it was in the dotcom tech boom.” It also warned, “Should the AI boom slow or go into reverse, recession risk in the advanced economies would be substantial.” A boom tied to a handful of companies’ enormous spending plans leaves workers, utilities, manufacturers and gas drillers exposed if the money stops flowing.

Alphabet reported capital expenditures of nearly $51.4 billion in the third quarter, more than double the same period a year earlier. Chief Financial Officer Anat Ashkenazi said more than a third went to data centers. Alphabet reported negative cash flow of $9.1 billion, its second time since going public in 2004; the first was the previous quarter. Its stock fell nearly 12% Thursday morning, partly because search advertising revenue came in weaker than expected.

Microsoft’s quarterly spending climbed 30% year over year to $45.2 billion, roughly three-quarters of it on short-lived assets such as chips and cloud services. CEO Satya Nadella said Microsoft added 24 data centers across five continents in the quarter, down from 31 in the prior quarter. The company cut $5 billion from its full-year spending forecast to $170 billion because of data-center delays, though Chief Financial Officer Amy Hood said spending was expected to accelerate the following year. Alphabet CEO Sundar Pichai said, “our capex to increase significantly in 2027.” Meta raised its spending forecast the previous week and made a public stock offering earlier Tuesday to finance its data-center buildout.

The Grid, the Costs, the Bottlenecks

An equipment distributor in the Midwest recently told the Federal Reserve Bank of Chicago that “tech companies had tried to buy all the available electrical equipment for their data center developments.” Rystad Energy estimated that computing and data-center spending would lift power demand by more than 300 terawatt-hours over the next four years, nearly doubling its current level.

“The spending rate is going to dictate the cadence of data centers, and data centers are going to dictate the cadence of generation build and demand,” said Julien Dumoulin-Smith, a utilities analyst at Jefferies. Hyperscalers face supply-chain bottlenecks and clogged interconnection queues that delay grid connections. “It’s about having a balance sheet and latitude to address execution issues,” he said. “Can you stand by these projects through challenges is like the bigger piece.” The projects’ scale—and the balance sheets behind them—now shape the pace of new generation and demand.

The world’s largest oil companies are also earning more as prices rise. Shell reported third-quarter profits of $12.1 billion, up from $5.3 billion a year earlier. TotalEnergies reported $8.2 billion, compared with about $3.7 billion the prior year. Equinor reported operating income of $12.4 billion Wednesday, roughly double the same period a year earlier. Higher crude and refined-product prices, including diesel and gasoline, challenge incumbents facing voters’ cost concerns. Fighting between the United States and Iran in the Middle East cut global refining capacity by as much as 10%, benefiting companies with refineries outside the region, including Shell and Total, both of which reported record refining margins for the quarter.

Minerals, Megaprojects and State Leverage

European Commission President Ursula von der Leyen said a Canada-EU alliance on critical minerals was essential to counter “chokepoints” and “economic pressure” blocking access. Speaking in Montreal before the EU-Canada summit, she said, “When trade becomes a tool of economic pressure, it’s the families that pay the price from the supermarket shelves to the cost of a new car.” Canada and the European Investment Bank were expected to announce an agreement that week to enable investment in critical raw materials. Europe’s imports of Canadian critical raw materials rose 62% last year to €3.3 billion, or C$5.18 billion, including lithium, cobalt, nickel and graphite.

Canada’s Prime Minister Mark Carney was rolling back climate policies as Canada pursued closer energy ties with Europe. The two sides were expected to reaffirm their three-year-old EU-Canada Green Alliance. Former Environment Minister Steven Guilbeault said he welcomed closer ties but hoped Canada could “adopt some more ambitious EU energy and climate policies.”

Meanwhile, U.S. companies seeking protection from geopolitical disputes involving China were lining up to use President Donald Trump’s $12 billion mineral stockpile, Project Vault. Brett Lambert, a former Obama Pentagon official overseeing the project, said it was in talks with more than 70 American manufacturers and preparing to release $1 billion in its first tranche of loans. Lambert leads VaultCo, a public-private partnership that received a $10 billion loan from the Export-Import Bank and $1.67 billion in private funds. He said VaultCo might buy minerals mined or processed in China after domestic and allied sources ran out. In the scramble for supply, national stockpiles and corporate buyers move first. The account’s stated cost to families is the price they pay.

Some companies are betting on a different energy system. South Dakota startup Antora Energy uses large heat batteries that store surplus renewable energy in heated carbon blocks and release heat on demand. The company uses them to produce steam for a biofuel refinery, replacing the need to burn natural gas and coal.