Experts: Midterm elections could slow data center buildout as opposition gains ground

Election results raise questions

Democrats’ victories could bolster local opponents of data centers and slow the spread of the facilities, according to Wall Street analysts. The results also elevated candidates who made tighter regulation a campaign priority.

Technology analyst Dan Ives of Yorkville Ives & Co. said investors are watching whether the elections will slow plans for 800 to 1,000 data centers across the country to support artificial intelligence. He told CBS News that Texas is central to the U.S. AI buildout.

Texas and Georgia in focus

In Texas, Abbott had already suspended data center approvals, the article reports, making it possible for Hinojosa to extend the moratorium. It does not provide first names or roles for Abbott or Hinojosa.

Georgia could also have major consequences for data center development. Keisha Lance Bottoms won the state’s gubernatorial race; Georgia is described as the country’s third-largest data center market. Bottoms said she plans to review tax incentives that have encouraged development there.

Potential costs and delays

Seema Shah, chief global strategist at Principal Asset Management, said developers could face added requirements to invest in electrical grids and could lose tax incentives. Both changes could increase project costs.

Shah said higher costs for new facilities could make existing infrastructure more valuable if it is already powered, permitted and operating. Oxford Economics analysts said stricter policies could extend project timelines, while slower construction in the medium to long term would not necessarily hurt the broader economy.

Analysts differ on scale

Ives said the AI investment boom may have become overheated, and that some spending with uncertain returns could be curbed. He expects unchecked expansion to be moderated, but probably not by much. The reporting also presents the election results as a potential brake on planned construction, without establishing how many projects might be delayed or canceled.