40% of Planned US Data Center Capacity Faces New Governors Who Want a Pause

About 40% of pending US data center capacity sits in states where newly elected governors campaigned on stopping or pausing construction, according to market intelligence firm Cleanview. The midterm results, paired with 46 local ballot measures approved or on track to pass, have scrambled development plans for the country's AI infrastructure boom.

New governors in Ohio, Georgia, Michigan, New Mexico and Texas promised statewide stops or pauses on data center construction. Winners in New York and Oregon pledged to prolong existing pauses. Moratorium-backed candidates also lead in Alaska and Kansas, though those races haven't been called.

The local measures, tracked by Bloomberg Economics, include at least 17 outright bans on large-scale data centers.

"It was obviously not a very good night if you're a data center developer," said Justin Teresi, a Bloomberg Intelligence policy analyst.

How hard did markets react?

Tech stocks plummeted Thursday on expectations of tighter regulation. The S&P 500 dropped more than 4%, and the Nasdaq 100 fell 6.4%, erasing $2.3 trillion in market value.

The selloff hits a sector that has carried US equities since OpenAI released ChatGPT in 2022. The S&P 500 more than doubled in the four years through Wednesday's close, and technology now makes up more than half the benchmark index's value.

The election piles pressure on developers and their customers, who already face wary investors and lenders questioning the heavy borrowing behind hundreds of billions in spending. Local opposition had already hampered at least 45 projects in the second quarter of 2026, according to research group Data Center Watch.

Tuesday's results could shrink the $1.4 trillion technology companies were expected to spend on AI infrastructure by roughly 5% to 7% in 2027, said Bloomberg Intelligence technology analyst Mandeep Singh. That covers chips, networking equipment, land and other construction materials.

Singh estimates as many as 10 gigawatts of planned data center capacity may fail to come online next year as scheduled.

"We've gone from the question of who is going to pass a moratorium to where can I even construct one of these things now?" Teresi said.

What happened in Ohio?

Ohio delivered the sharpest rebuke. Nearly half of the country's 46 ballot measures were in the state, and nearly all passed easily, according to Bloomberg Economics. About 11 Ohio towns passed total or near-bans.

Some measures rejected specific projects, such as EdgeConneX's complex in Ashville. Others required financial guarantees or set limits on data center power and water use.

Ohio has been "the Wild West" of data center construction, said David Niven, a political scientist at the University of Cincinnati. Cheap land and decades-long sales tax exemptions helped the state accumulate about 200 data centers, the fifth-most in the country.

"The practical consequences of the backlash really only took off within the last few months," Niven said. "Data centers played a key part in the sort of general dissatisfaction that Ohio voters felt."

An October poll from Ohio Northern University found 57% of state respondents would vote "yes" on a total ban on large-scale data centers. Nationally, nearly three in four Americans oppose a data center in their community, up from about two-thirds in March, according to a September Quinnipiac poll.

Local measures will bite faster than any gubernatorial action, said Joshua Basseches, an energy public policy expert at Case Western Reserve University in Cleveland, because cities and townships control zoning and property taxes.

Still, Governor-elect Amy Acton can issue executive orders halting state permitting once she takes office in January, or tighten scrutiny through appointments to agencies like the public utilities commission. Her stump mantra: "Ohio is open for business, but we are not up for sale." Permanent moves, such as extending the temporary tax credit freeze rolled out by her predecessor, would need legislative approval.

Who else is tightening the screws?

The blue wave puts Democrats in control of key branches of government in data center hotbeds including Virginia, Pennsylvania and Arizona, where they're likely to pursue utility and permitting policies that stall construction, according to a new BloombergNEF report.

Incoming governors in Iowa and Nevada pledged to end AI tax breaks. Florida's next governor, Byron Donalds, has promised a measure requiring data centers to source their own electricity rather than plugging into the grid.

Even politicians who once championed AI expansion turned critical in the final stretch. Republican Vivek Ramaswamy, Acton's challenger in Ohio, floated a plan requiring data centers to provide free electricity for nearby residents.

"If one gubernatorial candidate went further, the other would follow," said Morgan Scarboro, vice president at MultiState, a state and local government consulting firm. "This is an issue where it's very difficult to just look at a quote and know which party is speaking."

Gordon Johnson of GLJ Research wrote in a note late Tuesday that Texas projects without electricity and environmental permits already lined up will "probably go to Louisiana, Oklahoma or nowhere."

What does this mean for the industry?

Hyperscalers are expected to overhaul and shift development plans. Even without outright bans, state and local control over land-use decisions makes the environment increasingly hostile.

"We expect to see a lot more sand in the gears of the AI build-out regardless — with more time required to secure permits and other approvals, as well as more concessions that data center developers will have to make," said Libby Cantrill, PIMCO's head of public policy.

Dan Diorio, executive vice president of state policy and government affairs at the Data Center Coalition, said communities that prohibit data centers risk losing investment, jobs and tax revenue. "That's going to go to other communities that have not shut themselves off," he said, "or to states that have not shut themselves off."

Governments may also restructure incentives. Sarah Adkisson, an attorney at business advisory firm EisnerAmper, expects a shift toward a "prove it first, then you get" model, awarding tax breaks only after developers deliver on jobs, investment or revenue.

Tech companies were already adjusting before the election. OpenAI said Thursday it will avoid nondisclosure agreements when negotiating data center deals and will ensure residents don't pay for the electricity powering those projects.

The message from voters and markets is aligned: the next phase of the AI buildout will be negotiated, town by town, not assumed.