Is the AI bubble bursting? Thursday’s big stock market drop in the US was striking and while there will no doubt be ups and downs to come, it felt different from the bouts of nerves that have surfaced in recent months. A lot is at stake for Ireland here, with the economy operating as a kind of offshore hub of US multinationals and some of the key AI players among the State’s biggest employers and taxpayers.

The Democratic victory in the midterm elections has put the focus on public opposition to the roll-out of data centres vital to the AI project. These projects – and related investments in areas like chip manufacturing – have driven the US investment boom, a key factor supporting economic growth. But the political impact of public opposition to these massive energy-guzzling centres is one of the stories of the midterms.

And that is why the markets took fright on Thursday – there is no doubt that data centres now face a more difficult political backdrop. Regulation of the sector is likely to tighten, with investigations expected into the financial links between the Trump administration and the tech bros.

The question is whether this just means some slowdown and extra cost in the AI roll-out or something more serious. The high valuation of tech stocks, the huge AI infrastructure arms race and the increasing reliance on borrowed money to fund it all are part of what is causing nervousness in the market. Add in the circular nature of many of the financing deals involving AI and chip companies and, as Central Bank governor Gabriel........

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