Texas, the epicenter of the AI data center boom, could slow down after the election's political shift

MIT Technology Review examines how the results of the midterm elections in Texas could jeopardize the state's role as the largest hub for AI data center construction in the United States. The article, by James O'Donnell, describes Texas as the fastest-growing data center market in the country and the place where Big Tech is developing some of its largest AI infrastructure projects.

According to the piece, a Democratic wave swept the state. James Talarico won the US Senate seat over Ken Paxton. Gina Hinojosa won the governorship over Republican incumbent Greg Abbott. At the state level, Democrats will control the Texas House of Representatives for the first time in 24 years. Talarico and Hinojosa made data centers a central campaign issue and addressed them constantly at their events.

The article notes that the industry already sensed the shift in climate before the polls closed. At the DCD conference in Ashburn, Virginia, held on Tuesday, several speakers lamented that Texas had for years been the easiest place to build, until September. That was when Abbott, perhaps seeing growing bipartisan backlash against these facilities, began to change course. According to developers, the governor's office stopped answering their emails. On September 21, Abbott ordered a key state regulator to halt data center permits. Many attendees expected this to slow existing projects and that new ones could be blocked entirely.

The governor-elect appears willing to go further. In 2023, Hinojosa supported tax breaks for data centers as a way to boost construction jobs. During the campaign, however, she shifted to backing a full moratorium. That would pose a problem for hyperscalers, which have ambitious plans for AI training centers in the state.

The scale of the projects underway is enormous. Stargate Frontier, in Shackelford County, is projected at 1,820 megawatts. That is roughly equivalent to the country's largest data center, SpaceX's Colossus 2 in Tennessee, and more than double the largest center currently operating in Texas. Nexus Hubbard, also under construction and intended mainly for Anthropic, has a planned size of 6,400 megawatts. It would be the second-largest data center under construction in the US, behind only Meta's Hyperion project in Louisiana.

According to the article, the possibility of Democrats ordering delays or moratoriums adds to growing concern that the AI buildout could stall. Banks and lenders are already more demanding about the projects they finance. Since data center construction underpins much of current economic growth, these combined factors could have knock-on effects.

Voters' message across the country was, according to the piece, unequivocal. They backed measures to protect consumers from electricity bill increases attributable to data centers and favored some broader bans on new facilities. The author argues that Big Tech has failed to convince voters that AI-driven abundance will improve healthcare, make goods cheaper and multiply scientific breakthroughs.

The article adds that the picture is complex. It asks whether the counties with the most data centers influenced the election of these Democrats or whether the opposing vote came from elsewhere. The areas with the most construction are around Dallas. Dallas County and other nearby counties predictably voted Democratic. However, neighboring Ellis County, which leads in data center permit applications, backed Abbott and Paxton. Cameron County, near the southern border and a data center hotspot, voted Democratic, marking a shift. By contrast, Mitchell and Scurry counties in West Texas, home to several projects, voted Republican.

This matters because no single office decides on its own whether a project moves forward or stops. Decisions usually result from the interplay between municipal governments, county authorities and state agencies. Local officials with a say in these projects could resist sweeping state restrictions. In addition, Democrats pushing a moratorium could face opposition from construction unions, which backed some of their campaigns.

The article concludes that, although in theory the blue wave heralds the end of data centers in Texas, the winners may find that putting their opposition into practice once in office is far more complicated than promising it on the campaign trail.