Tech faces new hurdles as Democrats gain power, data centers scrutinized

Among the Democratic victories, the election of Gina Hinojosa in Texas, Amy Acton in Ohio, and Keisha Lance Bottoms in Georgia carries substantial implications for the AI industry. These governors campaigned on platforms that included restrictions on data center development, signaling a potential shift in state-level policies regarding permitting, regulation, and tax incentives. While federal legislation and potential presidential vetoes remain factors, the new governors possess considerable influence.

Outgoing Governor Greg Abbott of Texas, who initially supported data center development, recently adjusted his stance due to public concerns. In June, he directed state regulators to ensure data centers cover the costs of energy infrastructure. Subsequently, he halted new grid connection approvals and directed officials to enforce water-use reporting requirements, pausing new data center permits pending audits of electricity and water consumption. Hinojosa criticized Abbott’s actions as “nothing more than an election year stunt,” and has pledged to impose a moratorium on data center construction and eliminate related subsidies and tax breaks.

Governor-elect Amy Acton in Ohio also promised a conditional moratorium, requiring developers to cover utility costs, use union labor, and meet environmental standards. In Georgia, Governor-elect Keisha Lance Bottoms has committed to a temporary pause on new data center construction to evaluate its impact on electricity bills, communities, and the environment.

The data center construction boom is substantial; CBRE reported a record 7,481 megawatts of capacity under construction across eight major North American markets during the first half of 2026, a 25% increase year-over-year.

Tech analyst Dan Ives of Yorkville Ives believes these election outcomes represent a “new reality” for tech companies, forcing them to reassess their expansion strategies. While President Trump could veto restrictive federal legislation, the increased influence of politicians skeptical of AI will likely push tech companies toward compromise on AI-related policies. Ives noted that the AI rollout will likely proceed at a slower pace.

Shares of companies involved in AI compute and data center construction, including CoreWeave, Applied Digital, and Cipher Digital, experienced declines Wednesday, although the broader market saw gains. Ives suggests that the slowdown in data center construction could be a positive for tech stocks, as it may curb capital expenditures expected to reach $828 billion in 2026. He remains optimistic about the long-term revenue growth and profitability of AI, emphasizing that a more measured pace of development could be viewed favorably by investors.