Texas Election Shakeup Threatens the Epicenter of the AI Data Center Boom

Texas has been the fastest-growing data center market in the US and ground zero for some of Big Tech's largest AI infrastructure projects. After Tuesday's midterm elections, that position looks considerably less secure.

Democrat James Talarico won the US Senate seat against Ken Paxton, and Gina Hinojosa defeated Republican incumbent Governor Greg Abbott. Democrats will also control the Texas House for the first time in 24 years. According to MIT Technology Review, Talarico and Hinojosa discussed data centers constantly on the campaign trail.

The industry saw it coming before the polls closed. At the DCD conference in Ashburn, Virginia, on Tuesday, panelists lamented that Texas had been the easiest place in the country to build for years, until September. Developers said the governor's office had stopped answering their emails, and on September 21 Abbott directed a key state regulator to halt data center permits.

Hinojosa backed tax breaks for data centers in 2023 as a way to boost construction jobs, but during the campaign she pushed for a full moratorium. That would be a direct problem for the hyperscalers with ambitious AI training plans in the state.

The projects already underway are enormous. Stargate Frontier in Shackelford County is projected to serve 1,820 megawatts, roughly matching what the report describes as SpaceX's Colossus 2 in Tennessee and more than twice the largest data center currently operating in Texas. Nexus Hubbard, intended mostly to serve Anthropic, is planned at 6,400 megawatts, the second-largest data center under construction in the US behind only Meta's Hyperion in Louisiana.

Pressure is building from the financial side as well. Banks and lenders are already getting pickier about which projects they will back, and the data center buildout is underpinning a substantial share of current economic growth, so a slowdown could ripple outward.

Nationwide, voters sent a similar message. They backed measures to protect ratepayers from electricity bill increases caused by data centers and favored some larger bans on new facilities, a clear sign that the industry's pitch about AI-driven abundance did not land.

The county-level picture is messy. Dallas County went blue as expected, but Ellis County, which leads in permitting requests, voted for Abbott and Paxton. Cameron County, a data center hot spot near the southern border, shifted blue, while Mitchell and Scurry counties in West Texas stayed red.

And no single state office decides a project's fate. Decisions reflect an interplay among city governments, county officials and state agencies. Local officials may resist sweeping restrictions from the state, and Democrats could face pushback from the construction unions that backed their campaigns. A moratorium that looks inevitable on paper may prove much harder to deliver once in office.