Midterm results could slow AI data center expansion across the country

UPDATE - follow-up to Midterm elections could zap the data center buildout, experts say: Election results from Tuesday could give strength to opponents of data centers and slow down the growth of these facilities, analysts say. By Wednesday afternoon, voters approved 38 ballot measures in states like California, Illinois, Maine, Ohio, and New York to restrict data centers. Only voters in Harwood, North Dakota, approved a new data center. Several winning candidates also campaigned on stricter rules for these facilities.

Market Impact

Public pushback against data centers has grown rapidly as companies build them to power artificial intelligence. A CBS News poll this summer found that more Americans oppose than favor new data centers in their area by a margin of over 2-to-1. Stephen Dover of Franklin Templeton predicts the election will slow construction and bring new costs and regulations for developers. Dan Ives of Yorkville Ives & Co. states that the midterm outcome will slow the planned 800 to 1,000 data centers across the country. In Texas, which holds 25% to 30% of expected capacity by 2030, Democrat Gina Hinojosa defeated Republican incumbent Greg Abbott after proposing a temporary building ban. Gordon Johnson of GLJ Research notes this could stall 13 gigawatts of power in the state, though Abbott had already suspended approvals. In Georgia, the third-largest market, winner Keisha Lance Bottoms plans to sign an executive order pausing new construction and reviewing tax incentives. Semiconductor and hardware stocks fell sharply on Wednesday due to these permitting concerns. Seema Shah of Principal Asset Management warns developers may face grid investment rules and lost tax breaks, which could raise costs while boosting the value of existing operational facilities.

Context

These political shifts highlight how local infrastructure and energy demands can become major election issues. Data centers require massive amounts of power and water, often straining local utility grids and drawing strong neighborhood opposition. While market analysts expect some cooling in construction speeds, economists suggest this slower pace may help prevent overinvestment in the artificial intelligence sector.