# Why a Data Center Slowdown Benefits Big Tech — Transcript (2026-11-05)

https://aidailybrief.ai/e/2026-11-05 · Listen: https://pod.link/1680633614

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[00:00:00] The conventional wisdom heading into the elections were that if Democrats took power as they appeared that they were going to, it would be very bad for data centers. certainly one interpretation of the market sell-off in chips and neo clouds over the preceding few weeks was anticipating this potential reality.



And yet now that the thing has actually happened, people are starting to point out that there are some very specific reasons why not only might the blue wave not be as bad as people thought for data centers, but that in fact, a data center slowdown could actually be good for big tech

The The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI. All right, friends, quick announcements before we dive in. First of all, thank you All right, friends, quick announcements before we dive in. First of all, thank you to today's sponsors, KPMG, Robots and Pencils, Cdata, and Blitzy. To get an ad-free version of the show, go to patreon.com/aidailybrief, or you can subscribe on Apple Podcasts.

If you wanna learn more about sponsoring the show, send us a note at sponsors@aidailybrief.ai.

And finally, if you haven't yet, please [00:01:00] go check out my new podcast, How We Got Here. It is the deep dive backstory on important issues, many of which are in tech, but not all of them

That goes way more in depth than I have a chance to here on the AI Daily Brief This week's episode is about how we made the wrong things cheap and is particularly relevant, I think, in this cost of living election

You can find How We Got Here with NLW on any of your podcast apps or just go to howwegothere.com

Welcome back to the AI Daily Brief headlines edition, all the daily AI news you need in around five minutes. Is Ask Chat the new Google it? OpenAI says ChatGPT is starting to compete with Google as a search engine. During a press event earlier this week, OpenAI's consumer product lead, Adam Fry, said ChatGPT is now processing twenty percent as many search requests as Google

And while 20% may not sound like much, Google has held a 90% plus market share in search for over a decade, meaning no other competitor has come anywhere close to these numbers. Now, Fry did explain that OpenAI is classifying any query that results in a web search as a search request. [00:02:00] So the numbers might be a little juiced by ChatGPT's propensity to verify answers on the web

but again, no one has come anywhere close to competing with Google in this manner. and Google themselves have noticed users turning to AI search more and more

During last week's earnings call, Sundar Pichai said that strong growth in AI mode queries played a role in slowing search revenue growth because of lower monetization. The market sold off on those results. But with OpenAI finding a foothold in search, it's clear that Google has no choice but to disrupt themselves.

For OpenAI, gaining market share in search is of course extremely promising for the growth of their advertising business ads were hugely controversial when OpenAI introduced them at the beginning of the year. But shocker, backlash from actual users has been much less intense.

OpenAI's Fry again said, " "Ads Ads have not negatively impacted the product or the usage of the product, and most people do not seem to mind ads in the product."

He added that the relatively well-received rollout has, quote, " Maybe shown us that we could be doing more of this actually."



So if you are a person who does not like ads in your ChatGPT, it might be a good time to jump to the paid plan



By the By the way, it [00:03:00] also looks like after a couple of quiet weeks, we might be in model release season again soon. GPT-6.2 Astra and GPT-6.2 Sol have shown up on the Google Cloud backend, which usually indicates an imminent release



for for many there is one and only one question that matters: Can GPT 6.2 beat Opus 5.5?

Next Next up, a bunch of acquisitions in the news. Meta has acquired AI coding startup Conductor. Conductor was founded in 2024 and focuses on the orchestration layer, offering a platform that lets developers run multiple coding agents in parallel Meta launched their own coding agent, Muse Code, in August, but it's received relatively little buzz.

Sources said the acquisition is expected to help Meta build their next generation of AI coding products.

And it sounds like Meta is going to try to stand out from the crowd with a new approach to coding harnesses. Conductor founder Charlie Holtz wrote in a blog post, " "We We have some big, crazy plans for the next interface.

If you liked Conductor, you're gonna love what's coming

In other acquisition news, OpenAI has agreed to buy Peer Computer Company to enhance their Codex product. [00:04:00] The three-year-old startup produces open source developer tools which help teams store their code base and track changes. Codex already leans on Peer's tools, so it makes sense to bring the team in-house, particularly if OpenAI is still aiming to add integrated services and eventually start to compete with GitHub.



one thing to watch over the next year will be whether competition between frontier models flattens out and we start to see more focus on the agentic product layer These acquisitions seem to indicate that the leading labs know it won't be enough to just have the best model, and that in fact they'll need to have the best overall product experience as well

Over in enterprise adoption land, Apple has cut their internal AI budgets as part of a cost-cutting measure. Bloomberg's Mark Gurman reports that Apple quietly lowered their employee spending caps last month from three hundred dollars to two hundred dollars a day. Another source said another cut is potentially on the table and could reduce limits to just a hundred dollars a day.

Now, these cuts were framed as impacting engineering teams specifically



so this at least isn't about Apple trying to trim AI costs in marketing or finance departments. Non-engineers already have $100 spending limits and could see those cut to as little as $25 a day

And broadly [00:05:00] speaking, there's nothing all that surprising about Apple looking for cost savings in their AI use. This has been a theme across corporate America over the past six months

And is as much a byproduct of the fact that AI use shifted from a flat monthly subscription plan number to an effectively unlimited API number at the beginning of the year

Apple's limit of three hundred dollars a day represented over six thousand dollars a month limit in contrast, Uber imposed a fifteen hundred dollar a month limit in June

It's also not like Apple's policy here is particularly coherent. On the one hand, they are pushing to modernize their engineering process and other internal operations using AI

But then at the same time asking employees to rein in their experiments to keep it under budget



and the mixed messaging extends externally as well. Last week, newly installed CEO John Ternus told Wired, " We don't want to ship AI for AI's sake. When we're doing it right, people won't have to think about whether it was AI that made this happen or more traditional software. What matters is did we build something that they really love?"

However, during this week's earnings call, Turnus was hammering the AI theme. AI and Apple Intelligence were mentioned forty-five times, a new record for Apple. CFO Kevan [00:06:00] Parrick identified AI features as a key revenue driver, commenting, " We feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities."



Bloomberg's Apple insider Mark Gurman's sources inside Apple seemed just as confused about where the company is heading. Some said the three hundred dollar a day limit was excessive, with few engineers ever getting close. Others thought that the AI cuts were a sign of deepercost-cutting measures to come, including potential layoffs.

Reportedly, some Apple divisions have brought in consultants to evaluate their efficiency and operations. and Turness is believed to favor a flattened management structure to help the company run faster and leaner



I think one of the more interesting conversations coming out of this comes from OpenClaw creator Peter Steinberger, who wrote, " Do individual limits still make sense? As capabilities increase, you want to work with and support an agent that represents your project, that runs loops and evolves your code base.

The humans merely curate the automations." Put differently, when we talk about the shift from individual to team AI, the whole presumption of individual budgets gets thrown into question as well. Way beyond the scope of the headlines, but definitely something interesting for us to keep an eye on.

Now [00:07:00] Now staying on the adoption theme, while US mega banks are banning agents, some smaller banks are finding a way to make agentic finance work. Last month, CEOs from both JPMorgan and Bank of America said that they'd be blocking agents from accessing customer accounts. The risk of agents making mistakes being seen as too large for the big banks The information, however, reports that a crop of smaller fintech-friendly banks are experimenting with agentic payments.

One example was Lead Bank in Missouri, which is allowing their fintech partners to issue bank account numbers for agents. These function in a similar way to a credit card issued to agents, which allow customers to set spending limits and restrictions on what an agent can do.



The accounts also have a panic button that locks an agent out of it if it goes haywire. Internet-only Increase Bank is also offering segregated accounts for agentic use, as well as providing an agent-friendly API

Bank owner Derek Buckley said, " We don't need the entire industry to coordinate banking for agents. It's sufficient to have just a small cohort of technology-forward banks

Finally, one update on the theme that we are watching of AI and biology. Google's AI drug discovery spinoff, Isomorphic Labs, is in talk to raise [00:08:00] five billion dollars in outside funding as they scale up operations. Isomorphic was founded in 2021 as a vehicle to build on top of DeepMind's protein folding model, AlphaFold.

Earlier this year, then DeepMind CEO Demis Hassabis moved on to the chairman role. and he reported at the time that reduced duties at DeepMind were in part to allow him to focus on scaling Isomorphic Labs 

sources said the round would value the company at fifty billion dollars, and the new capital raise seems to signal that Google will treat Isomorphic and by extension AI-assisted drug discovery as a business capable of standing on its own

For those who are excited about AI'sfor health science and drug discovery

This sounds like it would be capital well invested And that is going to do it for the headlines. Next up, the main episode A new study from KPMG and the University of Texas at Austin found that when people work with AI, similar skills don't guarantee similar outcomes. Researchers studied more than five hundred early career professionals and found that the best performers consistently amplified the value of AI by guiding, evaluating, and [00:09:00] refining its outputs.

These top performers, called AI amplifiers, weren't defined by what they knew alone, but by how they worked with AI. Learn more about what separates AI amplifiers from everyone else at kpmg.com/us/aiamplifiers. 

The best teams don't have a single star carrying everyone else. They know their own strengths and each other's weaknesses and play to both. That's the team Robots and Pencils has built on purpose. Nobody there is grinding through busy work to pad a headcount number.

People come for the hard problems, and they stay because everyone around them is leveling up at the same time. In a market full of companies that are just trying to hire fast, that's worth a look. check out robotsandpencils.com/careers 

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Welcome back to the AI Daily Brief. 

The day after the big Democrat sweep, everyone's attention now turns to implications. Whatever a person's particular issue or industry



Wednesday, November 4th was spent exploring what the new crop of leadership in Washington and in state houses around the country means for those issues



And certainly the magnitude of the sweep is shaping those perceptions. According to the AP, Democrats have at least an eight-seat majority in the Senate and a forty-five-seat majority in the House, and they also picked up five governorships, including the pivotal win in Texas.



In short, outside of the Oval Office, the rest of Washington is going to be blue for the next two years

How much and what specifically will change though is another question

Now, [00:12:00] certainly for our purposes on the AI Daily Brief

The obvious first question is what's going to happen with data centers? I think a fairly understandable first layer analysis says that this is bad for them

43 out of the 44 data center moratorium type votes around the country passed, clearly giving an indication of where the public sentiment is

And Elon Musk joked in a way that wasn't joking at all, " Data centers in space looking pretty appealing right now."



Now the state where the changes are perhaps most significant when it comes to data centers is, of course, Texas. In that state, we already saw soon-to-be former Governor Greg Abbott running away from data centers trying an 11th hour switch that ended up being unsuccessful

And the assumption is that incoming Governor Gina Hinojosa is going to be much less amenable to data centers in the state, which could be hugely problematic Given how much Texas has been the epicenter of the data center build-out

There are certainly some indications on Wall Street that investors believe that the data center construction boom is basically over

Chip stocks and NeoClouds plunged on Wednesday, [00:13:00] including a 3% drop for Nvidia and a 10% drop from CoreWeave

Cetrini Research put out a piece called The End of the Trade as We Know It They declared that we're past the peak for AI CapEx

that risk has shifted to the downside, and that the data centers that do get built are going to get more expensive moving forward

Now what's interesting though, and what we'll come back to, is that Citrini's analysis is not just about policy. In fact, Citrini's analysis is more about how policy interplays with other existing challenges.

They wrote, " Outside of capital, Problems are now surfacing surrounding the execution of data center construction, where the bottlenecks, power plugs, and policy have evolved from a momentum trade to real-world risks. Securing interconnects, labor, and supplies is holding back construction and could create a slowdown in spending on their own.

If the delays stack up enough, with turbine back orders not being fulfilled and input costs cranking, investors start looking at the extendedcompletion dates up against the existing debt maturity dates, and you start hearing phrases like takeout risk and completion [00:14:00] defaults

Now in that environment, they say policy is no longer ambiguous

While they argue that none of the incoming governors in Texas, Ohio, or Georgia are likely to put an outright stop to the build-out, the cost they say is almost certainly going to get a lot higher. Larger municipal concessions, clean energy requirements, rate payer protections, and slower permitting

However, in maybe the most important line of the entire piece, they write, " Perhaps the bottlenecks become the excuse some people need to quietly trim their own projections without causing a rush for the exits

Now put a pin in that because we're going to come back to that particular market analysis in just a minute

Because it turns out that when you actually look past the headlines and the obvious default assumptions, a lot of folks are taking a much more nuanced view of what the likely implications of this Democrat sweep are

Yesterday on X, I posted a summary of my analysis which you heard on yesterday's show, which is that I don't think data centers stop getting built

Instead, I think that this newly emboldened set of leaders demand no NDAs and full process transparency. I think they demand the [00:15:00] builders pay the full cost of infrastructure build-outs, including subsidizing everyone else's electricity.

I think we start to get actual consideration of quality of life concerns and more environmental rigor. And I think that we see big money involvement in local communities in the form of direct subsidies or payouts to citizens, incentives,build out of unrelated community infrastructure, whatever it takes to get the deals done



I believe that even though Citrini is worried about this increasing the cost for the build-out, that the data center builders will absolutely jump to agree to all of this

Those new leaders, meanwhile, get to deliver a win for everyone while still being tough on tech

And the whole system keeps turning in a way that's honestly a lot more sustainable



Now, Now, the most reasonable pushback I got on that on X

was a sort of assertion that that my argument assumes that people are rational actors

With the person basically implying that the reason that people were against data centers was that they had been poisoned by a digital psyops campaign, probably architected by China

However, if you've listened to my first episode of the new podcast, How We Got Here, about how tech lost America

[00:16:00] I think that even if there was a massive China psyops campaign



people were fairly likely to be negatively predisposed to data centers regardless



And I think we also have to account for the possibility that data centers as they have been constructed so far just haven't been very good neighbors

But what evidence do I have?

There are certainly some places that you can look Where the new crop of leaders are just advocating for bans outright. And we'll actually come back to the new support for pausing AI in just a moment But if you look at some of the biggest stars of the new show

They're laying out a path for compliance and creating a narrative architecture that the data centers can abide by



in his media tour following his election in Texas, incoming Senator James Talarico said, " We have to crack down on these big data center companies taking advantage of Texas communities. We've got to make them pay for their own energy so they're not driving up utility bills across the state, make sure they recycle their own water, and ensure they get the consent of people who live in these communities before they start building."



And it's not just me that's viewing that not just as political rhetoric, but as a bid that can be built upon. JP Powers of RWA Wealth [00:17:00] Partners wrote, " There's definitely some fears about what this might mean for the AI build-out, especially on data centers, and those names have already been under pressure because

of the expected Democratic victory. But I think it's probably a little bit overblown. It's going to put more onus on the states, but I don't think that will impact existing projects all that much. It could result in higher cost of production if these companies have to provide maybe more local assistance or navigate more regulation across the board to get some of these projects through, but we still need these data centers

The Wall Street Engine account on X wrote, " Gina Hinojosa may not be as bad for Texas data centers as it looks.

Her plan asks for no subsidies, union labor, no NDAs, and proof household power and water bills won't rise. Much of that is already underway

And even more than individual points of analysis. outside of basically the neo clouds, it was far from doom and gloom yesterday on Wall Street. The S&P 500 saw its strongest single day move since August, with the S&P 500 up one point six percent and the Nasdaq rising by zero point nine percent Obviously, we need to see a little more green to call it a full-on trend reversal, but it does kind [00:18:00] of look like a near-term bottom for the market the the conventional view is that markets hate uncertainty, and gridlock in Washington takes a lot of uncertainty off the table.

However, even in the Reuters article that presented this viewpoint, they struggled to find many sources that actually believe we're in for a calm two years in Washington

The next phase of the Iran war, a potential government shutdown in December, and interest rate hikes from the Federal Reserve all present the potential for major shocks to come. Seema Shah from Principal Asset Management said, " We expect market volatility to continue.

It will be a white-knuckled ride for the next year." And yet the big signal that many took from Wednesday's markets was a rise in big tech. The Mag Seven added a trillion dollars in market value, with Microsoft gaining six point seven percent, Amazon up six point one percent, and Google gaining three point three percent

Now, part of that may be that markets are just taking a sigh of relief that the election is over. but there is increasingly an argument about how the hyperscalers could actually benefit from an AI slowdown

Remember that line from Citrini, " Perhaps the bottlenecks become [00:19:00] the excuse some people need to quietly trim their own projections without causing a rush for the exits." And remember that heading into the election, the conversation has been nothing but when the AI bubble will burst And in this case, the AI bubble that they're talking about is not just in the valuations of the companies, but in the amount that they plan to spend on the AI data center build-out

The question that many are now starting to explore is whether this presumption of a policy-induced slowdown allows air out of that trend

rather than having to wait for a full pop

Again, as Citrini pointed out, there were already a lot of challenges to the build-out. Each of Google, Meta, Amazon, and Microsoft came in under their CapEx targets in Q3, flagging construction delays across their projects

Microsoft was specific, stating that a five billion dollar miss on projections was down to a rented facility that wasn't ready on time. In September, Oracle gave notice that they might declare force majeure in relation to a New Mexico project that is facing power connection issues

And while in the aggregate data center [00:20:00] construction is still surging ahead, it's clear that the pace of construction is straining the supply chain, tapping out the labor pool, and putting stress on balance sheets.

It's not crazy then to think that the hyperscalers might welcome an external reason to give them some cover to lower CapEx forecast for next year

And it could even give them a PR win. The Hill reports that hyperscalers are already in talks with environmental groups to draft a joint framework for data center development And while some will certainly assume that this is cynical greenwashing, if a framework does come together, it could be an easy win for Democrats that ran on bringing the data center build-out to heel



Employ America's Skanda Amanath suggested the second order benefit, commenting, " I can attest to the fact that the group chat was discussing earlier today whether the hyperscalers would welcome political blocking of data center construction as a capital discipline coordination mechanism."

And market analyst Matt Farley wrote, " Slower AI CapEx is bullish, not bearish. Harder to build data centers mean GPU prices flatten, compute spot rents climb, CapEx falls, margins expand, [00:21:00] FCF flips faster. Scarcity doesn't kill compute owners.

It makes them rich and feeds investors what they wanted all along: higher returns on capital while maintaining positive free cash flow. Can the constraint now be the moat? And was it always a race to getting the most infrastructure built the fastest before this inevitably happened?



so so instead of the doomsday scenario of data centers halting and the AI trade crumbling, taking the rest of the market with it Instead, you've got the potential of hyperscalers, taking advantage of the political and narrative moment to lower at least a bit their CapEx projections for the next couple of years, 

which makes markets happy for a variety of reasons, including an increase in the free cash flow of those stocks



and a potential bubble lets air out instead of having to pop.

Jessica Lessin from the Information made exactly this point

She wrote The The market reaction today points to the fact that investors have a very nuanced lens on the AI trade, which could be good news for those worried about an eventual huge crash. Rather than a big wipeout of everything today, we're seeing the market trade up a little, hyperscalers up a little, chips down and [00:22:00] Neo clouds down That suggests that the AI trade doesn't play just one way, which is probably good news for those who are concerned that weakness in some companies could pull the whole market down.

Obviously, major changes in the macro, revenue growth halts, et cetera, could still collapse the whole pie. But the way things are trading now suggests a more nuanced picture



Ultimately, one historical truism on Wall Street is that it's very rare That a bubble actually features years of everyone correctly asking when a bubble will pop. Usually

Historically speaking, bubbles tend to happen when most people don't see any risk, and your Uber drivers are starting to hand out stock picks

But if things might not be so bad for the data center build-out and actually could have some benefits to a slowdown What about broader AI policy?



I talked yesterday about a lot of the very reasonable low-hanging fruit, common sense type proposals that I think a big cross-section of politicians can get behind. Things like additional liability for the labs, disclosure of safety incidents, third-party auditing



but what about more severe measures like the Bernie Sanders proposal, which includes jailing anyone that develops AGI? Heading into the election Abdul [00:23:00] El-Sayed came out in favor of an AI pause, and at least some other progressives seem to be getting on board

Arizona Congresswoman Yasmin Ansari wrote, top of the Democratic agenda on day one needs to be a pause on advanced AI development, regulation of this out-of-control industry, and a ban on artificial super intelligence."

AI news aggregator Andrew Curran commented, " This is probably going to be a huge part of political coverage for the next two years. The Democrats are going to push hard for an AI pause, new industry regulations, and probably a Bernie-style ban on superintelligence itself, itself that exceeds the human level.

It will be interesting to see what the opposition ends up looking like." Many people on the right are also extremely anti-AI, so this will probably make for some strange bedfellows on both sides

Now, given how many other issues there are, I am somewhat less convinced that an AI pause inevitably becomes central to the progressive agenda But let's say that it does. What would that mean for the industry and AI politics?

Frankly, a legislated AI pause seems like basically a non-starter during this Congress



Trump is the most stalwart supporter of AI, or excuse [00:24:00] me, super intelligence, or excuse me, SI, in the entire Republican Party at this point, and Cannon seems to be eager to veto anything Democrats pass

And I have a very hard time seeing enough Republicans switching sides to have it to get enough votes to override a veto

And it's not like there's clear consensus. this week's election vote



was not a unified endorsement of a single type of Democrat politics



it was a rejection of the GOP But the folks that came into power represented the full range from moderates to the DSA And even though they are now in power, Democrats are gonna have to do a lot of work to get to party alignment on some of these key issues.

Semafor reported that there's already a schism within the Democrats on how to best deal with this particular issue. Josh Gottheimer, one of the more centrist members of the caucus commented, " We agree that this technology is changing how Americans work and live.

We also agree that we need common sense guardrails so that it works for families, workers, and kids, not against them."

We'll continue to have constructive discussions on how best to get there. I look forward to working with every member, new and returning, to get it done.



despite [00:25:00] being extremely not in favor of an AI pause as such, the fact that it's going to get broader political discussion Doesn't stress me out at all. I think somewhere along the way we forgot that the whole point of a democracy is to be able to have fierce debates

In service of coming to the right answers

AI is getting more powerful with every single model release This is indeed the one thing the accelerationists and the safetyists agree upon

Over the past year



the rest of America has been brought into that conversation Now we actually get to have the debate. 

debates which I will continue to argue have much more room

for agreement than the extremes of either position would have you think. 

This is obviously something that we'll be spending a bit more time on in the future. For now, however, that is gonna do it for today's AI Daily Brief. Appreciate you listening or watching as always, and until next time, peace. ​