- Data center operators and AI companies face a new political risk after Tuesday's U.S. election
- Neocloud and AI stocks fell sharply after Democrats and anti-data center measures won big
- Analysts say stricter state rules could make AI infrastructure slower and costlier to build, hitting smaller neocloud providers hardest
Data centers – and Republicans – lost big at the ballot box in the latest U.S. election, leaving a key question for AI companies hanging in the air: What now?
Judging from the financial market’s reaction to Tuesday’s results, investors aren’t optimistic. Stocks for several major neocloud and AI players plummeted in the wake of the election.
As of Friday morning, CoreWeave stocks were down 17% over the past five days, Nebius’ down 15%, and IREN’s are down nearly 10%. Though Amazon, Microsoft and Google remained positive, chipmaker Nvidia was caught up in the correction, with share prices down nearly 9% over a five-day period.
Why the election matters for data centers
The industry has been laser focused on building as much new compute capacity as fast as possible. And up until recently, investors have been on their side. But with capex rising, delays mounting and voters turning out in force to reject data centers, the path forward is getting thornier.
“The ballot measures demonstrate that communities increasingly want a say in how that capacity is built and who pays for it, particularly where electricity bills, water consumption and tax incentives are concerned,” Satish Patel, Senior Investment Analyst at CoinShares, told Fierce. “The results could make the infrastructure supporting AI and cloud services slower and more expensive to develop.”
Patel said the new constraints popping up across the nation are more likely to impact smaller neocloud players, who have a lighter balance sheet and less site flexibility than their large, global hyperscale cousins.
Carl Fleming, global co-head of the Energy and Project Finance Practice at McDermott Will & Schulte, told Fierce that “Political change creates uncertainty, but the implications will depend on the actions each administration pursues and the authority it has to implement them.”
For developers and investors, he said, the first order of business is understanding what project elements are already secured and what remains exposed. “Existing approvals, remaining permits, utility arrangements and contractual commitments need to be assessed together,” he explained. “A project can retain its approvals and still face changes that affect its timing, cost or financeability.”
Both Fleming and Patel asserted that projects with deliverable power connections and community approval become all the more valuable in this environment.
Why can’t they just look elsewhere?
The election included 41 ballot measures across 10 states. Asked if data center operators will simply look elsewhere, Patel said it’s a possibility but warned not every development-friendly town has the resources a data center needs.
“Hyperscalers and neoclouds can redirect new investment between U.S. regions and internationally, making geographic flexibility more valuable. However, a welcoming town does not necessarily have an electricity connection capable of supporting a large data center,” he said. “Relocation can also mean restarting utility studies, planning applications and community negotiations.”
Patel also pointed to the growing number of state-wide measures as another hurdle. State officials in Massachusetts, Pennsylvania, New Jersey, Utah, Texas and West Virginia have all released plans outlining new requirements data centers must meet for new developments. New York instituted a temporary statewide moratorium on new data center projects over 20 MW, while Texas paused state permitting for major data center projects.
According to Data Center Watch, at least 120 data center projects worth $198 billion were blocked or delayed in the first half of 2026.
“Moving to the next town cannot resolve a statewide permitting restriction, while moving to another state requires securing a different combination of power, land, fiber connectivity and local support,” Parel said. “Generating electricity on site can reduce dependence on grid connections, but gas-powered projects still require environmental permits. Texas’s environmental permitting pause therefore reaches beyond the ERCOT interconnection process.”
With Democrats controlling more governorships, statehouses and congress, the threat of additional state and potentially federal-level restrictions looms. And they’d likely have citizen support, given anti-data center sentiment across the country is growing.
A University of Massachusetts poll from September found that 65% of people would oppose the construction of a data center in their community, while just 11% would support it. A Gallup poll from May put the opposition tally even higher, at roughly 71%.
Trying to close the flood gates
Developers aren’t taking the backlash lying down. New Street Research’s team noted the Data Center Coalition – backed by hyperscalers, neoclouds and AI model providers – has been increasing its lobby spending. According to OpenSecrets, the group’s federal lobbying outlay jumped from $978,000 in 2025 to $1.38 million so far in 2026. That money is in addition to the millions hyperscalers individually spend on lobbying efforts.
New Street sketched out two potential futures for the data centers, one in which the industry is able to reclaim a social license and one in which it isn’t. In the latter scenario, the firm warned a patchwork of regulations could proliferate and siting friction and “multi-year delays” could become the norm.
Read more about data centers on Fierce Network:
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