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As FWR shows in a range of interviews with wealth managers, they see artificial intelligence as a driving force for market performance. But there is a hurdle. After New York suspended construction of major data centers due to their high consumption of energy and water, it raises questions about the pace of AI growth in some jurisdictions.\t \t \t \t \t \t <\/p>\n
\n (Editor”s note: While some US states are pushing back against
\n data centers, it is clear that some investors are fretting about
\n how realistic valuations of AI-related stocks are. Today, a
\n selloff in semiconductor stocks extended, amid evidence that
\n China’s advanced chipmaking capabilities are significant. US
\n technology-heavy Nasdaq 100 futures fell 0.6 per cent, while in
\n Asia, a 7.5 per cent slump put a Bloomberg gauge of semiconductor
\n shares on course for its biggest decline since April 2025,
\n according to Bloomberg today. One way or the other, the AI trend
\n is going to involve a bumpy ride. A point to consider is that
\n while some countries might restrict data centers, others will use
\n it as an excuse to seize a competitive lead.)
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\n Data center\u00a0construction has been surging recently due to
\n demand for processing power from artificial
\n intelligence\u00a0firms. But in view of their consumption of
\n scarce resources and a public backlash, New York governor Kathy
\n Hochul signed an executive order this month\u00a0prohibiting the
\n construction of major data centers for a year. New York was the
\n first US state to make such a move.
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\n A number of farmers in the US are also raising red flags on the
\n potential drain on local resources that the data center\u00a0boom
\n poses to rural regions, using farmland, electricity and water
\n needed\u00a0to raise livestock and grow crops.\u00a0
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\n David Harrison, fund manager of the Rathbone Greenbank Global
\n Sustainability Fund, told this news service that he believes that
\n data centers could become an increasingly political issue in 2026
\n and beyond. \u201cSome of the largest planned sites will require over
\n 1 gigawatt of power and have significant water usage demands. The
\n sheer scale of capital involved (over $700 billion invested in
\n new data centers in the US in 2026 alone, according to Moody\u2019s)
\n is staggering and creates both opportunities and risks for
\n investors,\u201d he said. \u201cWe think that it only accelerates the need
\n to invest in grid infrastructure, renewable power sources and
\n energy storage solutions. We are also seeing strong demand for
\n companies offering solutions linked to water infrastructure and
\n HVAC equipment.\u201d
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\n \u201cThe move in New York could be replicated across a number of
\n states, particularly given environmental concerns and rising
\n energy bills for consumers. Increased regulation or political
\n intervention appears a strong probability,\u201d Harrison continued.
\n \u201cThis may slow down the roll out of data centers which could
\n create uncertainty for the speed of AI adoption. On the other
\n hand, it\u2019s important to remember that new technology and
\n approaches to improving the efficiency of a data
\n center\u00a0(cooling, power usage) are continually evolving,
\n which could also bring a new angle to the debate.\u201d
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\n Katsunori Ogawa, chief portfolio manager for Sakigake High Alpha,
\n SuMi TRUST, believes the challenges are unlikely to fundamentally
\n undermine the growth trajectory of AI-related investment. \u201cThe
\n more important question is not whether AI demand itself will
\n continue to grow, but whether power supply and infrastructure
\n development can keep pace with the speed of AI adoption. Looking
\n ahead, competitive advantage is likely to depend not only on
\n greater computing power, but also on improvements in energy
\n efficiency and cooling efficiency,\u201d Ogawa said.
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\n \u201cWe believe this changing environment is likely to create new
\n growth opportunities for Japanese companies,” Ogawa continued.
\n \u201cAs AI adoption accelerates, the importance of energy-saving
\n technologies, advanced power management systems, next-generation
\n materials, and power semiconductors is expected to increase
\n significantly. These are all areas in which Japanese companies
\n have developed strong expertise over many years, and the benefits
\n of AI investment are therefore likely to extend beyond
\n semiconductor chips themselves to the broader supply chain that
\n supports them.\u201d
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\n Meanwhile, Euan Ker, senior responsible investment analyst at
\n Aegon Asset Management, thinks that a growing backlash against
\n the environmental footprint of hyperscale data centers is
\n starting to materially affect the pace and location of build-out.
\n \u201cThis is not an isolated development,\u201d Ker told this news
\n service. \u201cOver 70 jurisdictions globally are now considering or
\n implementing restrictions, ranging from moratoria to tighter
\n permitting rules and cost-allocation mechanisms,\u201d Ker said.
\n \u201cPublic opposition is also rising, with support for new data
\n center\u00a0construction in the US notably low. Combined, these
\n factors are beginning to reshape project timelines, siting
\n decisions and economics.\u201d
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\n \u201cWhile demand for AI-related infrastructure remains strong,
\n delivery risk is increasing \u2013 reflected in recent project
\n cancellations and expectations that only around half of planned
\n US capacity may be delivered on schedule in the near term,\u201d Ker
\n continued. \u201cAgainst this backdrop, the quality of operators\u2019
\n energy strategies is becoming more important in securing
\n approvals, particularly where they address grid impact and
\n renewable integration.\u201d
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\n \u201cFrom an ESG perspective, the debate highlights a broader
\n transition challenge: balancing digital infrastructure growth
\n with local environmental and social constraints,\u201d Ker added. \u201cFor
\n investors, differentiation is likely to emerge between developers
\n that can demonstrate credible, system-aligned energy solutions
\n and those more exposed to regulatory and community pushback.\u201d
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