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The artificial intelligence (AI) trade, which has powered much of Wall Street's bull-market rally, has been under pressure for quite some time now. Concerns about generating adequate returns compared with the massive investments being made in it, rising rate worries and the evil impact of rogue AI agents on cybersecurity have kept AI investing in a tough spot over the past month. Now, the space is likely to face another challenge following the Democrats' strong performance in the 2026 midterm elections. With concerns mounting over data center construction, energy consumption and regulatory hurdles, investors may want to consider diversifying into other sectors.
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