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The AI narrative has been one of explosive growth, limitless demand, and structural transformation. But markets do not move on narrative alone. They move on capital, infrastructure, and constraints.

This week, we are seeing early signs that the infrastructure behind AI may not scale as smoothly as investors expect.

The Infrastructure Constraint

New York State is considering a three-year moratorium on new data centers. Reports indicate that approximately 20 projects valued at nearly $100 billion were blocked in the second quarter of 2025 due to local opposition.

This is not a partisan issue. Political voices across the spectrum are raising concerns about the pace and impact of AI expansion.

Why?

Two primary constraints:

1. Electricity Demand

Data centers are projected to increase electricity consumption by 40 to 60 percent over the next three years. That kind of growth strains local power grids. Building new generation capacity takes time. Utilities cannot simply increase supply overnight.

If grid stress increases local power costs, municipalities push back. That slows expansion.

2. Water Usage

Cooling requirements are substantial. A single large data center may require up to 300,000 gallons of water per day. In regions already facing water pressure, that becomes politically sensitive very quickly.

If permitting slows, the AI buildout slows. And if the buildout slows, revenue expectations tied to AI demand may need to be recalibrated.

What the Technicals Are Saying

Using Structural Valuation Analysis, we now examine the major AI leaders.

Amazon

Amazon has broken below its MSG price at 5.5 times book value. In decades of SVA data, this type of breakdown is rare. To reach fair market value, the stock would need to decline approximately 27 percent further.

Microsoft

Microsoft appears to be testing key valuation levels near its bubble price of 7.4 times book value. Fair market value sits roughly 26.5 percent lower. If support fails decisively, downside risk expands.

Nvidia

Nvidia has slipped toward its HB5 level at 26 times book value. If that level fails, fair market value suggests potential downside approaching 48 percent. Nvidia remains central to the AI narrative, so price behavior here is critical.

Oracle

Oracle has already broken down materially. The AI premium that once supported the stock has eroded quickly.

Meta Platforms

Meta is hovering near its bubble valuation. Historically, this type of uncertain action near extreme levels has often led to further downside pressure.

When Fundamentals Join Technicals

Markets often ignore fundamentals during euphoric phases. Technical cracks typically appear first. But when fundamentals begin to align with technical weakness, the combination can be powerful.

Right now, we see:

• Regulatory uncertainty
• Infrastructure bottlenecks
• Political scrutiny
• Technical stress
• Significant gaps to fair market value

That alignment warrants caution.

The AI story may remain powerful over the long term. But valuations rarely move in straight lines. When expectations meet constraints, repricing can be swift.

For investors heavily exposed to AI leaders, this is not a time for complacency.

It is a time for discipline.

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