Perspectives from Harbor’s Investment Team and Strategic Investment Partners
The November midterm elections may influence the direction of fiscal, trade, energy and technology policy. But for many investors, the distinction between a political event and an investment decision remains critical. Policy announcements do not always become law, market expectations may already reflect anticipated changes, and even a correctly anticipated election result offers no guarantee of predicting asset‑price reactions.
Across Harbor’s investment team and its specialist partners, we asked our experts to share any specific insights developed around mid‑terms, how they are thinking about artificial intelligence (AI) relative to the upcoming elections and across their investment processes.
Throughout, we see a consistent message which is not indifference to elections. It is selectivity about which developments deserve an investment response. True to their craft, the investment managers diligently monitor changes in business economics, valuations, financing conditions and portfolio risk, while retaining the distinct disciplines through which they seek compelling long‑term risk‑adjusted outcomes.
Harbor’s Perspective: The AI Buildout May Be More Sensitive to State‑Level Policy Than the Congressional Result
Spenser Lerner
Look beyond the congressional headlines
Our investment team seeks to identify data‑center development and the broader AI investment cycle as a central intersection of the midterms and markets. Recent analysis draws an important distinction between the potential for federal political debate and the practical influence of state and local decisions on the construction of new computing capacity. In this case, the White House’s support for AI development and federal legislative hurdles could constrain the scope for immediate national restrictions, even as congressional debate creates headline volatility. That assessment is our team’s opinion, not a prediction of legislative outcomes.
State and local decisions may be more consequential for the pace and economics of development. Increasingly, electricity prices, water requirements, land use, permitting, grid connection and public incentives connect the AI capital spending cycle with household affordability and local politics. For investors, these are not merely political talking points. They can potentially affect project timelines, infrastructure costs and the returns available to companies supplying or operating data centers.
Why implementation may matter more than election‑night narratives
Our team highlights that data‑center projects can require lengthy development, permitting and grid‑connection periods. Consequently, a more restrictive policy environment might not immediately halt near‑term capacity additions but could raise the cost of future construction and extend delivery schedules. This distinction between near‑term operating activity and the longer‑term supply pipeline matters when analyzing earnings assumptions and the valuation of AI‑related businesses.
Potential effects are not uniform across the AI ecosystem. Delayed new supply could challenge businesses whose valuations depend on rapid equipment deployment or continued acceleration in construction. Conversely, owners of existing, usable computing capacity could benefit from a more constrained supply environment if demand remains strong. The relevant analysis therefore appears not simply whether AI spending rises or falls. Rather, it appears where bottlenecks could occur, which firms bear the costs and which firms may retain pricing power.
A differentiated response within a consistent investment framework
At Harbor, we maintain a constructive view on growth equity and AI exposure with a recent preference for higher‑quality U.S. hyperscalers, considering election‑related risks among other factors.
In our view, this illustrates how investment discipline may incorporate political considerations without suggesting that investment managers necessarily adjust their strategies in response to political developments. A portfolio could adapt when the risk‑reward balance changes without becoming a short‑term wager on an election outcome.
For investors, our analysis suggests three lines of inquiry: 1). assess direct and indirect concentration in AI infrastructure; 2). distinguish businesses dependent on future capacity additions from those monetizing existing capacity; and 3). ask how permitting, electricity availability and financing costs enter managers’ return assumptions. These questions remain relevant after election day, regardless of which party gains seats.
Perspectives from Harbor’s Strategic Investment Partners
Acadian Asset Management LLC
Treat election sensitivity as a risk‑budget question
Acadian does not position portfolios to predict electoral results. Its bottom‑up, systematic process assesses prospective stock returns and constructs portfolios against client benchmarks and risk objectives. The team believes its current sensitivities to different congressional outcomes appear relatively mild, although its analysis remains ongoing and it has not concluded a change in their broader investment outlook at this time.
Political events can create exposures that conventional risk models fail to capture. Acadian may therefore use event‑related stock baskets to estimate benchmark‑relative sensitivity, asking whether an unintended political tilt merits reducing after accounting for transaction costs and forgone expected return. At times, historically, Acadian has implemented earlier event‑specific controls, including before the 2024 presidential election, while noting that the 2024 control was subsequently removed.
Acadian views AI as a genuine multi‑year productivity and capital‑investment cycle, but separates the economic promise of the technology from the price investors pay for it. Valuation, quality, growth and sentiment signals remain central; AI effects may enter those signals as they alter company fundamentals. The team also monitors disruption risk with a proprietary research framework supported by language‑model tools. Acadian believes investors should ask what political or AI sensitivities are embedded in active risk, and what evidence would justify the cost of changing them.
Byron Place Capital Management
Resist thematic excitement; insist on intrinsic value
Byron Place remains focused on small‑cap companies with sustainable competitive advantages, successful management teams and market prices below assessed intrinsic value. Glenn Gawronski says the firm does not believe that their investment views should be shaped around the midterms, as forecasting political outcomes is not viewed as a source of their potential investment edge.
Its caution about AI has been more pronounced than that of several peers. While Byron Place believes AI investment has helped fuel the U.S. economy and expects continued expansion, it warns against chasing what it regards as a potential investment bubble. That concern reinforces the distinction between growth in a technology and attractive prospective returns for clients.
The firm identifies inflationary pressure and cost of living as major election issues. But those macro concerns do not replace its security‑selection criteria. For small‑cap investors in particular, the discipline of management assessment, competitive positioning and entry valuation is intended to provide a consistent framework across political cycles. Byron Place believes investors should ask whether a manager’s enthusiasm for a theme is supported by company-level competitive advantage and an adequate margin of risk mitigation.
Granahan Investment Management
The next AI beneficiaries may be adopters, not builders
Granahan anticipate that the midterm elections will materially influence its broader investment outlook. Its bottom‑up stock‑picking approach begins with the company; if election‑related policy changes could materially affect its investment thesis, the team would evaluate the impact and respond. It cautions investors not to confuse political outcomes with investment outcomes.
Granahan expects AI to be a major productivity driver, helping employees generate more output rather than simply replacing jobs. It anticipates pressure on some repetitive knowledge‑work roles alongside demand for employees who combine industry expertise, judgment, relationships and AI skills.
Its investment distinction is between the early beneficiaries, including semiconductors, cloud and infrastructure providers, and a potential next wave of companies using AI to lift margins, expand revenue or gain market share. Smaller and midsize companies could experience meaningful operating leverage if adoption succeeds, while less adaptable business models may be disrupted. Granahan also flags domestic demand, interest rates and tax policy as important for small‑cap fundamentals. Granahan believes investors should look for evidence that AI adoption is translating into measurable margins, revenues and competitive gains rather than merely higher spending.
Income Research + Management (IR+M)
Underwrite the financing of the AI buildout
IR+M does not view midterm elections as a primary consideration around its investment outlook. Its fixed‑income process emphasizes bottom‑up credit fundamentals, relative value, liquidity and portfolio risk management. The team describes itself as duration‑neutral and predominantly investment‑grade, with investment views informed by issue economics rather than political predictions.
IR+M believes AI is becoming a structural credit‑market theme. Hyperscaler capital spending has been supported by debt issuance across investment‑grade corporate bonds, project finance, high yield and securitized markets, including asset‑backed and commercial mortgage‑backed securities connected to data centers and equipment. They believe that breadth increases the opportunity set but also complicates underwriting.
IR+M monitors the implications of energy costs, fiscal sustainability, Treasury supply, inflation, labor markets and Federal Reserve policy. Within individual credits it examines spreads, structure, prepayment and convexity characteristics, credit enhancement and issuer‑specific risks. Data‑center debates could affect financing volumes and structures, but the decision to invest often rests on adequate compensation for risk. IR+M believes investors should ask how AI-related issuance affects credit selection, diversification, liquidity and spread compensation, not simply thematic exposure.
Jennison Associates
Distinguish durable AI returns from a spending cycle
Jennison expects persistent inflation, elevated interest rates, geopolitical uncertainty and the midterms to remain sources of market volatility. It monitors potential policy implications but maintains a long‑term, bottom‑up fundamental research process. The team also notes relatively resilient consumer activity and economic growth while remaining alert to pressure from energy prices and inflation.
Jennison views AI as a transformational, multi‑year investment cycle whose potential opportunities extend beyond traditional technology companies. Yet the scale of spending is not, by itself, proof of durable shareholder returns. Investors are increasingly reassessing the pace of investment, which companies could earn attractive returns on that spending, and how benefits are distributed across industries.
The firm expects disciplined fundamental research to become more important as the market differentiates among companies within the AI ecosystem. That means identifying businesses with sustainable earnings potential, rather than assuming that all participants in a large structural theme may benefit equally. Jennison believes investors should ask which companies can convert AI investment into enduring profit growth and how valuations account for uncertainty in returns.
LSV Asset Management
Diversification helps avoid turning a forecast into the portfolio
LSV makes a pointed distinction: even if an investor correctly predicts an election result, the market response may still be surprising. The outcome, subsequent policy and expectations already embedded in security prices are three different variables.
Rather than focusing on political scenarios, LSV emphasizes a diversified, bottom‑up stock selection approach informed by company‑specific fundamentals. It ranks companies using valuation, fundamentals and indications of improvement, then applies limits on single‑stock, industry and sector exposures. The aim is to prevent one unexpected policy development from becoming the defining exposure.
LSV acknowledges that diversification does not eliminate broad market risk or the risks associated with value investing. Its contribution is a firm‑level process statement, rather than an individual portfolio manager’s election forecast. That is an important expression of rigor: a manager need not claim predictive expertise in every headline‑driven topic. LSV believes investors should review whether position and sector limits reduce unintended single-scenario risk, while recognizing that diversification cannot remove market or style risk.
Neuberger Berman
Commodity fundamentals can outlast election headlines
Neuberger Berman’s commodities team generally avoids large changes based solely on elections. Its framework centers on supply, demand, inventories, weather, geopolitics and economic activity. It watches policy because decisions affecting trade, energy production, infrastructure and regulation can alter those fundamentals.
The team sees AI as a structural source of demand for electricity and materials, particularly copper, grid equipment and energy infrastructure. It also notes the growing public debate over electricity prices, water use, grid capacity and data‑center permitting. Those concerns connect household affordability to the cost of expanding the AI economy.
From this perspective, the useful signals include energy inventories, supply disruptions, inflation, global growth and trade policy rather than election polls. A diversified commodities approach can examine multiple channels through which AI infrastructure investment may influence markets, while avoiding the assumption that one commodity or political scenario captures the entire opportunity. Neuberger Berman believes investors should evaluate commodity exposures using physical supply-demand balances, inflation sensitivity and the potential for changing infrastructure investment.
Osmosis Investment Management
Resource efficiency often is an economic variable
Osmosis CIO Fadi Zaher describes an intentionally systematic approach in which elections are not an input. The firm believes policy changes may influence company economics or market structures and considers these factors more relevant to its investment outlook than attempting to predict electoral outcomes. Its emphasis is on what rules actually change costs, capital requirements or pricing power.
Osmosis views AI as a lasting technological development but questions who ultimately captures the investment value. Chips, cooling, power, grid equipment and access to electricity may be as important as the most visible AI businesses. It highlights the mismatch between the speed at which data centers can be built and the slower pace of expanding supporting power infrastructure.
For Osmosis, power and water intensity can be financially material. When resources are constrained or expensive, companies using them efficiently may have an advantage. The firm compares resource efficiency within sectors as part of understanding competitiveness and resilience. It also warns about crowding when investors concentrate around a shared AI narrative. Osmosis believes investors should ask how resource intensity, power availability and crowded positioning affect portfolio-level resilience and individual company economics.
PanAgora Asset Management
Separate technological transformation from market pricing
PanAgora distinguishes predicting political outcomes from analyzing their economic consequences. Changes in taxation, regulation, trade and fiscal policy can influence markets, but their effects on corporate profitability, interest rates and growth may be more relevant than party labels alone.
The firm sees AI as a potentially transformative general‑purpose technology. Early investment has centered on chips, data centers and power. Over time, it expects opportunity to broaden toward companies that apply AI to improve productivity, strengthen competitive positions and create new offerings. Importantly, technological progress and investment returns need not occur at the same time.
PanAgora connects the affordability debate to inflation, interest rates and capital investment, noting that infrastructure spending may precede more widespread productivity gains. It also emphasizes diversification when market valuations cluster around a small number of political or technological narratives. PanAgora believes investors should distinguish near-term AI capital expenditure from longer-term productivity gains and test concentration across seemingly unrelated holdings.
Westfield Capital Management
Positive on AI fundamentals, more selective on AI stocks
Westfield has not changed its investment thesis specifically for the midterms. Its company‑ and industry‑focused research process remains the basis for investment outlook, even as the team follows inflation, energy prices, interest rates and AI concentration.
Westfield remains constructive on the underlying AI economy, pointing to rapid usage growth and new agentic applications. But it has become more cautious about AI‑related stocks and reports reducing potential exposure because of concerns including return on spending, financing arrangements, commoditization, power constraints and regulatory hurdles. This is an important distinction: the manager’s investment outlook reflects an evolving assessment of investment risks rather than an attempt to anticipate electoral outcomes.
Westfield also describes incorporating AI into parts of its own research workflow, including idea research, information gathering and proprietary scorecards. Its perspective reinforces that investment managers can take AI seriously as both an economic force and a research tool while demanding discipline about valuations and prospective returns. Westfield believes investors should ask how managers distinguish a favorable industry outlook from an attractive stock, and what would lead them to reduce exposure despite strong thematic conviction.
Harbor’s Closing Perspective: Focus on What Changes the Investment Thesis
These views are not identical, far from it. Acadian and LSV emphasize systematic risk control and diversification. Byron Place and Granahan prioritize business quality and valuation. IR+M evaluates credit structure and compensation for risk. Neuberger Berman follows physical commodity fundamentals. Osmosis studies resource efficiency. PanAgora and Jennison examine how technological adoption translates into profits. Westfield and Harbor’s investment team demonstrate that remaining faithful to a process can still involve changing exposure when underlying risks evolve.
For investors, the practical lesson may be to translate election coverage into a short list of testable investment questions: What policy change is plausible and implementable? Which company cash flows or financing costs would it alter? How much of that outcome is already priced in? Are there potential concentration risks to consider? And could adjustments to an investment approach potentially enhance its long‑term risk‑reward profile after accounting for costs?
Elections warrant attention, but attention is not the same as reaction. The value of active management lies in applying a repeatable process to new information, seeking to distinguish material developments from temporary noise, while also remaining accountable to clients’ long‑term objectives.
Important Information
Investing entails risks and there can be no assurance that any investment will achieve profits or avoid incurring losses.
The opinions expressed are as of October 2026 and are subject to change.
This information has been provided by various subadvisors who work with Harbor Capital Advisors and is for informational purposes only. It does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or to purchase shares, units, or other interests in investments that may be referred to herein and must not be construed as investment or financial product advice.
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Companies involved in Artificial Intelligence may be adversely affected by competition, technological disruption, cybersecurity incidents, supply chain constraints, regulation, reputational events, or shifts in market and investor sentiment. AI‑related companies face rapid technological change and evolving legal and regulatory scrutiny that could negatively impact their business, profitability, and market value.
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