Key Points
Voters sided against the data center industry in nearly every local ballot measure last week, and Democrats who ran on pausing new projects won governor’s races in Texas, Ohio, and Georgia.
In NBC News’ national exit poll, 76% of voters said they would oppose a new data center in their community, and CBS News found most Democrats and most Republicans felt the same way.
Other issues mattered more to most voters, but opposition to data centers crossed party lines, so investors may want to treat local and state approval as a real risk to when new data centers actually open.
When a tech company tells Wall Street it plans to open a new data center in two years, investors can build that date into their estimates for how fast the company will grow. But getting the facility up and running depends on a lot of decisions the company doesn't get to make on its own.
Last week's midterms gave investors a reason to look more closely at how much of the AI build-out can go ahead as planned.
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Here are four of the biggest results for the AI trade.
1. Data center ballot measures overwhelmingly went against the industry
A total of 41 data center-related measures were on the ballot across 10 states on Tuesday. 40 of them went against the industry. Voters approved 27 measures that restricted development or formally expressed opposition to it while rejecting all 13 measures that would have helped projects move forward or signaled support for them.
That directly affected the plans for several hyperscalers. For instance, nearly 80% of voters backed a ban in a city in Ohio where Amazon (NASDAQ:AMZN) had proposed a $2 billion data center.
2. Governors-elect in Texas, Ohio, and Georgia want data center limits
Democrats who campaigned on pausing new data center development won in Texas, Ohio, and Georgia, three of the most important states in the AI buildout.
In Texas, while Republican Gov. Greg Abbott had already ordered a temporary pause on state permitting while energy concerns are addressed, he was defeated by Gov.-elect Gina Hinojosa, who made data centers a center of her campaign. Hinojosa promised to pause new approvals until state lawmakers can pass protections for residents that would give local communities more say.
Ohio's Gov.-elect Amy Acton said developers will need to meet a list of conditions before they can build, including covering their own utility costs and using union labor, and in Georgia, Gov.-elect Keisha Lance Bottoms proposed a temporary pause to assess how new facilities affect electricity bills and the environment.
Image source: Getty Images.
3. How the midterms could affect Elon Musk, SpaceX, and Tesla
Elon Musk backed Republicans to the tune of $474 million -- $224 million in Texas alone, the home state of both Space Exploration Technologies Corp (NASDAQ:SPCX) and Tesla (NASDAQ:TSLA).
That could mean critical infrastructure could be harder to build -- Gov.-elect Gina Hinojosa has already asked state officials to hold off on a potential sale of public land for SpaceX's Starbase -- and a potential merger between Musk's two massive companies could face greater scrutiny.
That scrutiny extends beyond Texas. Musk could very well face congressional investigations from Democrats concerned over his involvement with the Department of Government Efficiency.
4. Exit polls show wide opposition across party lines
In NBC News' national exit poll, 76% of voters said they would oppose a new data center in their community. 56% said AI data centers were a major or crucial factor in how they voted for Congress.
Obviously, many other factors were at play, several of which played a bigger role in the decisions of most voters, but opposition to data centers was a surprisingly bipartisan view, and that could have implications beyond this election alone.
CBS News found that most Democrats and most Republicans opposed a new data center in their community, and in the battleground states CBS highlighted, that held in cities, suburbs, and rural areas alike.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Space Exploration Technologies, and Tesla. The Motley Fool has a disclosure policy.