Alphabet's $15 Billion Investment in Malaysia Data Centers Shows That Midterm Results Won't Stop the AI Boom

One question has been at the center of artificial intelligence (AI) investors' minds ever since midterm results came out. Will the Democratic Party's gains cause the AI boom to slow down? Shortly after the results were official, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) made an announcement that showed AI expansion is far from over.

Google's parent company announced a $15 billion investment in data centers in Malaysia. It demonstrates that tech companies are comfortable with overseas investments if midterm results create more hurdles in the future.

Image source: Getty Images.

The timing is convenient, but it's not a drastic pivot

Although investors will be looking closely at how Democratic wins in key states affect the AI build-out, especially in Texas, Alphabet's $15 billion investment isn't exclusively tied to midterm results. The timing of the press release fit right into the news cycle, but it takes a lot of time to plan out these types of deals.

For instance, Alphabet had previously invested $2 billion in Malaysia in 2024, when former President Joe Biden was still in charge. A Democratic president and majority also didn't stop Alphabet from investing $9.5 billion in the U.S. in 2022, with a large portion of that earmarked for data centers.

Alphabet is also still building data centers in the U.S. The company has held this approach for Republican and Democratic majorities. The previous Democratic administration welcomed AI and let its sprawl continue. Biden happily touted one of Microsoft's data centers in Mount Pleasant, Wisconsin, emphasizing that it would create 2,000 new construction jobs. The tone toward data centers sounds a little different now, but data centers are still being built.

International data center construction will still grow

International data centers have become more common. Microsoft launched its largest data center in India this year, and India's data center market is projected to maintain a 13.37% compound annual growth rate (CAGR) through 2035. That projection came out months before the midterms.

Some investors may think that international data center construction will grow thanks to the midterm election results. However, that growth was going to take place anyway. AI demand is so intense, and shortages have become such a constraint, that tech executives are discussing setting up data centers in space.

Political uncertainty isn't anything new, especially for tech giants. International data center growth will continue regardless of whether U.S. data center growth accelerates in tandem or slows down.

Substantial amounts of capital flow into this industry every quarter. The tech companies that gave us cloud computing, e-commerce, and other innovations did not stop their march toward progress regardless of which party controlled Washington. That pattern will continue to play out in the AI boom.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool has a disclosure policy.