Democratic Wins in US Data Center Hubs Threaten AI Buildout

Democrats win in key hub cities

Public opposition to development adds another hurdle

Projects in Kansas, Ohio face setbacks

Texas, one of the busiest US states for AI data center construction, has elected a Democratic governor for the first time in 36 years, raising fears of disruptions to related projects. Separate local referendums tied to data center development across 38 US jurisdictions also delivered victories for opponents of development, stoking concern over demand for graphics processing units, or GPUs, and memory cards.

The Associated Press and other outlets reported on November 3 that Texas Governor-elect Gina Hinojosa, 52, had voiced opposition to data centers early on. In July, she proposed expanding resident participation in decisions on whether to build the facilities. Her platform also called for giving residents priority access to the water and electricity needed to run data centers and ending subsidies for such projects.

Referendum results released alongside the US midterm elections are also set to weigh on the sector. According to local election authorities, all 35 measures with confirmed vote counts out of 41 total favored tighter restrictions on data center development.

In Edgewater, Florida, a measure to ban new approvals, construction, expansion and operations was backed by 77% of voters. In Emporia, Kansas, a ban on building large-scale facilities passed by a 60% to 40% margin.

In Sunbury, Ohio, where Amazon is pursuing a $2 billion data center project, a proposal to ban facilities with power demand above 25 megawatts led by more than 50 percentage points.

Concern over tighter regulation of data centers also hurt sentiment toward AI-related stocks. Amazon and Nvidia, both of which closed higher in regular trading, fell 0.75% and 0.26%, respectively, in after-hours trading.

The MSCI Asia Pacific Index fell as low as 250.00 during the session, down 2.3% from the previous close and the lowest level since mid-April. South Korean and Japanese stocks, which have heavy weightings in semiconductor and AI-related shares, dropped as much as 3% to 4% intraday.

Son Ju-hyung, Hankyung.com reporter handbro@hankyung.com