Texas was the new epicenter of the AI data center buildout. That might be kaput.

Texas is emerging as the primary hub for AI data center expansion in the United States, attracting major players in the tech industry. However, the recent political shift in the state may threaten this position. Following the recent midterms, Democrats gained control of the Texas House for the first time in over two decades, winning key races including US Senate and gubernatorial seats.

Democrat James Talarico and Gina Hinojosa made data centers a central issue during their campaigns, and the industry took notice. At the Data Center Distribution conference in Ashburn, Virginia, panelists lamented that Texas had been the most accessible location for data center development until September, when Republican Governor Greg Abbott began altering his stance.

Abbott directed a key state regulator to halt data center permits, signaling potential delays and halts for new projects. The scale of ongoing projects is substantial, with planned facilities like the Stargate Frontier and Nexus Hubbard exceeding capacities of existing centers. This potential for delays and moratoriums adds uncertainty to the AI buildout.

Banks and lenders are becoming more selective in funding these projects, and combined with growing voter support for protecting ratepayers and limiting new data centers, the AI data center expansion in Texas could face significant hurdles. The outcome hinges on whether these anti-data center sentiments translated to local officials, as decisions often involve multiple levels of government.

While the blue wave may spell trouble for Texas data centers, implementing these changes once in office may prove more challenging than it seemed during the campaign.