US midterms: AI data centre boom is set for upheaval after US election rout
asserted
boom → set → rout
Data centre developers seeking to build dozens of sprawling artificial intelligence campuses across Texas were already dealing with a suspension of approvals under Republican Texas Governor Greg Abbott.
asserted
developers → seek → Abbott
Under Gina Hinojosa, elected on Nov 3 as the first Democratic governor of the Lone Star State in more than three decades, they are facing their worst-case scenario.
asserted
they → elect → scenario
As part of her campaign, Hinojosa repeatedly called for an immediate moratorium on data centre development.
asserted
Hinojosa → call → development
She has described Abbott’s vows to rein in data centre operators as “nothing more than an election year stunt” and has accused developers of “raising our utility rates and depleting our water”.
asserted
She → describe → water
She has vowed to halt approvals until “a legislative session that puts Texans first so that we don’t have any more communities in Texas who are powerless against these global corporations”.
asserted
who → vow → corporations
Combining Hinojosa’s victory with those of other Democrats who won gubernatorial races from Georgia to Ohio and Pennsylvania could leave half of proposed AI data centre additions across the US vulnerable to stricter local scrutiny and pushback.
uncertain
half → combine → scrutiny
All of them made more aggressive data centre regulation a central part of their campaigns, and their wins underscore the intensity of the growing voter backlash against the sites powering AI systems worldwide.
asserted
wins → make → systems
The results were part of a broader Democratic rout on Nov 3 that wrested party control of the US House and Senate away from Republicans, propelled by voters’ frustration with the cost of living and the war in Iran.
asserted
that → wrest → Iran
Democrats are poised to put closer scrutiny on Silicon Valley interests that had largely been spared during US President Donald Trump’s first two years in office.
asserted
that → poise → office
Markets were already starting to bake in the risk of more regulatory scrutiny in trading early on Nov 4.
asserted
Markets → start → Nov
Contracts on the S&P 500 Index fell as much as 1.2%, while futures on the Nasdaq 100 Index declined 2.2%.
asserted
futures → fall → Index
Hardware suppliers in South Korea, Taiwan and Japan, key players in the American AI buildout, also fell, with Samsung Electronics and SK Hynix down as much as 4% in South Korea, while Nvidia’s chipmaker Taiwan Semiconductor Manufacturing slid.
asserted
Manufacturing → fall → Korea
The election results threatened to overshadow bullish earnings results from AI chipmaker Advanced Micro Devices and server supplier Super Micro Computer that had earlier touched off a rally across stocks tied to the buildout of infrastructure powering the technology.
asserted
that → threaten → technology
In Texas, roughly 13 gigawatts of data centre capacity – enough to power roughly 10 million homes at any given moment – is immediately exposed by Hinojosa’s win, Gordon Johnson of GLJ Research said in a note late on Nov 3.
asserted
Johnson → power → Nov
“Projects with power, permits and steel keep going,” he said, and those with power but no state environmental permits slip 12 to 18 months.
asserted
those → go → months
But those “projects with neither probably go to Louisiana, Oklahoma or nowhere”, Johnson said in the note.
asserted
Johnson → go → note
Texas accounts for nearly 30% of the US data centre capacity set to come online in 2028, representing by far the largest share of any state, research firm SemiAnalysis said ahead of the election.
asserted
SemiAnalysis → account → election
“A few months of lost time in that market can move the national number,” according to SemiAnalysis.
uncertain
months → lose → SemiAnalysis
Hinojosa presents a clearly “more bearish approach: She would impose a moratorium until legislation is passed that gives communities a voice, protects household utility bills, and ends the tax incentives for data centres”, the firm said.
asserted
firm → present → centres
“The question now is how long the pause lasts.”
asserted
pause → last → ?
Jefferies has assigned “tiers” to US states representing the “political risk” they represent to new data centre projects.
asserted
they → assign → projects
Tier 1 implies the state is welcoming to new data centres.
asserted
state → imply → centres
Tier 5 assumes the opposite.
asserted
Tier → assume → opposite
Ahead of the Texas election, Jefferies analysts including Jonathan Petersen said in a note that a “Hinojosa win would result in an immediate statewide pause and move Texas from Tier 3 to Tier 4 under our framework”.
asserted
win → include → framework
“Regardless of the election outcome, the 2027 session could bring tighter rules around who pays for grid infrastructure, water use and data centre tax incentives,” Petersen said.
uncertain
Petersen → bring → infrastructure
“We view these as more likely to increase development costs and requirements than materially restrict the Texas pipeline.
asserted
We → view → pipeline
In Ohio, another state that has been flooded with data centre proposals, particularly around Columbus, Democrat Amy Acton defeated billionaire entrepreneur Vivek Ramaswamy to become its next governor, flipping a Republican-held office.
asserted
Acton → flood → office
Acton has called for an immediate conditional moratorium that requires data centre developers to meet a series of requirements in order to be cleared for construction.
asserted
that → call → construction
She has pledged to “fight against the unchecked development of data centres”.
asserted
She → pledge → centres
Democrat Keisha Lance Bottoms became the first black woman elected governor of Georgia, wresting control of the executive mansion after more than two decades in Republican hands.
asserted
Bottoms → become → hands
While Georgia has historically encouraged data centre development and ranks as the third-largest state for data centre development, local opposition is growing.
asserted
opposition → encourage → development
Bottoms called for a moratorium on new construction of the sites on the campaign trail.
asserted
Bottoms → call → trail
The Georgia election presented “a clearer divide than several other states”, Jefferies said in its note.
asserted
Jefferies → present → note
“A Bottoms win could bring a temporary statewide pause.”
uncertain
win → bring → pause
Democratic incumbent Josh Shapiro’s win as governor of Pennsylvania was largely expected to maintain the status quo.
asserted
win → expect → quo
Shapiro, who once encouraged and helped attract data centre developments in the state, has since shifted his stance, railing against speculative projects and those that locals oppose.
asserted
locals → encourage → that
Ahead of the election, PIMCO head of public policy Libby Cantrill warned that the gubernatorial races would have a significant impact on the path forward for data centre projects, citing candidates’ calls for construction pauses similar to one enacted in July by New York Governor Kathy Hochul.
“Even if statewide moratoria do not result, we expect to see a lot more sand in the gears of the AI buildout regardless – with more time required to secure permits and other approvals, as well as more concessions that data centre developers will have to make,” Cantrill said.
asserted
Cantrill → warn → that
The Aporia
