Voters across the United States turned data centers into a ballot-box issue on Election Day, approving local restrictions in 44 of the 45 referendums completed so far, according to Redbud Consulting figures cited by the Associated Press. The backlash landed hard on Wall Street, where AI stocks had been riding a nonstop construction boom.
Tech shares sank Thursday after Democrats won Congress and governorships in Texas, Georgia and Ohio on promises to rein in AI infrastructure. The S&P 500 fell more than 4%, the chip index dropped 12% and Nvidia slid about 9%, Yahoo Finance reported. A Friday bounce left the S&P 500 with its worst week since June.
Local Anger Becomes a Voting Bloc
Rising electricity bills and water worries drove much of the opposition, particularly among Texas ranchers watching drought-stricken supplies. TechCrunch also pointed to secretive approval processes and nondisclosure agreements signed by local officials. An AP VoterPoll found about three-quarters of voters oppose a data center in their own community, and AdImpact tracked more than $380 million in TV ads mentioning the facilities.
"Data centers were on the ballot." — Stephen Sanders, Lubbock protest group co-founder, via the Associated Press
Harwood, North Dakota, was the lone place where voters welcomed a data center, CBS News reported.
Governors-Elect Promise Pauses
In Texas, Democrat Gina Hinojosa, who unseated Gov. Greg Abbott, campaigned on a temporary construction ban. Abbott had already suspended approvals, so she could extend that freeze without new legislation. Analyst Dan Ives estimates Texas will host 25% to 30% of the capacity expected online by 2030.
Georgia's Keisha Lance Bottoms has pledged an executive order pausing new construction, and Wisconsin's David Crowley now backs a moratorium and an end to the sales tax break for developers. Ohio's Amy Acton says she will block projects that fail to meet standards.
Industry Scrambles to Reassure Communities
OpenAI released a community pledge to cover electricity and grid-upgrade costs and to disclose construction plans, noise studies and water use, Euronews reported. Meta executive Dina Powell McCormick warned that building will get harder because data centers are the most visible face of AI. Elon Musk, who spent roughly $474 million backing Republicans, mused that orbiting data centers look more attractive now.
Overseas chipmakers felt the shock too. TSMC fell about 10% and ASML 6% during the week.
Delay, Not Derailment, Is the Base Case
Economists see moratoriums slowing projects rather than stopping AI spending, and projects already approved or under construction are expected to continue, Euronews reported. Oxford Economics said slower construction would not necessarily damage the broader economy. Morgan Stanley cautioned the country could split into areas open and closed to data centers, with Texas the most important test.
Investors will now watch what the new governors do once they take office, and whether Republicans and Democrats can agree on federal rules for who pays for the power.
Reporting for this story drew on coverage from CBS News, Associated Press via PBS NewsHour, Euronews, Yahoo Finance, and TechCrunch.
