The Morning Download: The People vs. AI

Good morning. The quickly building backlash against AI poses a challenge that the tech sector and its investors aren’t well equipped to address.

By nature, they know how to cope with massive engineering problems. If a model hallucinates or if it’s too slow or performs poorly, write a better one. If another company races ahead, you have an opportunity to catch up. But hiring more engineers to write better, more powerful AI won’t quell the exploding level of opposition to AI data center construction and AI itself that the WSJ captures today in this story.

The opposition is a material, long-term strategic problem for AI companies. As the WSJ reports, local opposition has delayed or blocked 48 data center projects valued at $156 billion last year, with 20 more canceled in the first quarter due to the backlash. More highlights from the story, which you can read below:

• Pollsters and historians say the souring of public opinion is all but unprecedented in its speed. “I don’t think I’ve ever seen something intensify this quickly,” Gregory Ferenstein, who conducted a recent poll with researchers at Stanford University and the University of California, Berkeley, said of the backlash.
• …. After bubbling up in a handful of races last year, it has exploded onto the ballot across the country. Voters in Festus, Mo., ousted four city council members a week after they approved a $6 billion data center. Dozens of communities in states from Maine to Arizona are trying to ban new data centers. Some 360,000 Americans are in Facebook groups opposed to the facilities, roughly quadruple the number from December, figures from organizations fighting the AI build-out show.

Public opposition to AI is bound to intensify, given that its impact on jobs and the economy has been limited, so far. That may be changing. As the Financial Times reported yesterday, “Standard Chartered plans to cut almost 8,000 jobs as it puts AI at the centre of a new strategy in a striking example of how the technology threatens to reshape workforces across financial services.” Just imagine the public backlash against AI if, as many expect, entire classes of jobs such as taxi and ride-sharing drivers, long-haul truck drivers and local delivery people are automated.

Many people thought that AI’s great crisis would be disappointing performance or lackluster demand. But capital keeps pouring into AI. Google and Blackstone are standing up a new AI cloud company, per the WSJ yesterday. They will use Google’s chips and $5 billion of capital for the unnamed venture, the WSJ reports. And as we report below, Gartner expects global AI spending to grow 47% in 2026 to $2.59 trillion.

Beyond ‘hype.’ Maybe the great AI crisis is that the public has an intuitive understanding that the technology will live up to expectations afterall and there are no guardrails, principles or plans to guide the social and economic transformation.

AI spending to hit $2.59 trillion in 2026, up 47%. Worldwide AI spending is forecast to total $2.59 trillion in 2026, up 47% from 2025, fueled by massive infrastructure investments and rising model consumption by enterprises, according to Gartner.

Spending on AI infrastructure alone, including AI chips, servers and network fabric, will reach $1.4 trillion this year and keep climbing, said the research and consulting firm.

Gartner also forecasts spending on AI services and software to increase significantly in 2026 and 2027.

John-David Lovelock, distinguished VP analyst at Gartner, sees several factors shaping enterprise AI spending in 2026, including a shift by businesses away from earlier “moonshot projects,” many of which proved to have a high failure rate.

“CIOs are going, 'you know what, instead of doing projects about AI, I'm going to do projects that include AI,'” he told The Wall Street Journal Leadership Institute. 

Enterprises will increasingly expand their use of AI models embedded in existing software and AI agents deployed across workflows, Gartner said.

At the same time, the field of vendors is expected to narrow. “We're going to see a lot more M&As,” he said. “If you're a CIO, it's unmaintainable for you to have to engage with 10 or 15 different companies in order to bring one AI piece of functionality to your company.”

• Google and Blackstone are launching a new AI cloud company backed by $5 billion in equity, using Google's specialized chips to challenge Nvidia-dependent rivals like CoreWeave. The venture aims to bring 500 megawatts of computing capacity online by 2027, with Blackstone expected to support around $25 billion in total compute investments.
• Standard Chartered will cut nearly 8,000 back-office jobs by 2030, as it shifts more to AI-driven operations. The FT reports that the lender framed the move as an effort to replace lower-value human roles with investment in technology and financial capital.
• Meta is reassigning 7,000 employees to four new AI-focused organizations designed with "AI native" structures and fewer managers, ahead of planned layoffs affecting 8,000 workers, the New York Times reports.
• A jury on Monday unanimously dismissed Elon Musk’s claims against OpenAI, finding that he brought his lawsuit against the company and Chief Executive Sam Altman after the statute of limitations expired. Musk’s attorney said in court that his side will reserve its right to appeal.

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Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute's new Executive Resilience series, where she's profiling America's top execs about their fitness and wellness habits.

Follow Belle Lin on LinkedIn and X for her latest reporting on enterprise technology and AI.

Steven Rosenbush is chief of the enterprise technology bureau at the WSJ Leadership Institute. He also has a column. You can follow him on LinkedIn.

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