Midterm Election Results: Impact on Data Center Buildout
The Democrats' midterm election victories could impact data center development, according to Wall Street analysts. As of Wednesday, ballot measures restricting data centers had been approved in 37 states, compared to just one allowing them, highlighting a growing public opposition to these facilities.
Public Backlash and Election Impact
The rapid growth of data centers to support artificial intelligence has faced widespread opposition. A CBS News poll revealed a 2:1 margin of Americans opposing new data center construction in their areas. The election results are expected to:
- Slow Data Center Construction: Stephen Dover of Franklin Templeton predicts a "slowdown" in data center development, bringing new regulations and costs for developers.
- Impact Key States: Texas, with 25-30% of expected data center capacity by 2030, and Georgia, the third-largest data center market, are particularly notable. Democrat Gina Hinojosa's win in Texas could stall 13 GW of data center power, while Keisha Lance Bottoms' victory in Georgia calls for a pause in construction.
Analyst Insights
Dan Ives, Yorkville Ives & Co. technology analyst, believes the midterm elections will significantly slow the planned 800-1,000 data centers across the U.S. for the AI Revolution. He highlights Texas as a state heavily affected by these changes.
Gordon Johnson, CEO of GLJ Research, agrees that Hinojosa's win could halt the addition of 13 GW of data center power in Texas, building on Abbott's existing moratorium.
Long-term Impact and Economic Perspective
While data center moratoriums may delay construction, they are unlikely to hinder the broader AI sector's economic growth. Dover suggests that a slower buildout might temper excessive investment, but not significantly harm the economy. Economists argue that while more restrictive data center policies may delay construction, they won't significantly impact capital spending on AI or its growth-boosting effects.