Democratic Wins May Slow U.S. AI Data Center Expansion

Democratic victories in several state races, including Texas, are expected to tighten regulations on AI data-center construction, which could reduce the pace of a spending surge that analysts say has driven up to a quarter of this year’s U.S. economic growth. Goldman Sachs estimates that Democratic-controlled states will account for 45% of the nation’s planned data-center capacity, while Texas alone is slated for a quarter of the country’s AI infrastructure build-out.

"This is a rare case where state and local leaders have influence of geopolitical-level import," said Harry Krejsa, director of studies at the Carnegie Mellon Institute for Strategy & Technology.

Industry experts warn that a slowdown could affect thousands of jobs and delay projects awaiting permits or tax incentives. Mona Dajani, co-chair of Cooley’s infrastructure, energy and real estate practice, noted that pending approvals could increase costs for AI firms, potentially rendering some projects financially unviable.

Wells Fargo projects that a 10% cut in Texas data-center capacity could shave 1.6% off Big Tech AI-infrastructure spending. While the federal administration under President Donald Trump has signaled support for AI growth, state-level actions such as ending tax breaks, tightening climate and electricity rules, and allowing local moratoriums could reshape the investment landscape.

Despite the potential slowdown, economists say growth would remain positive. Joe Brusuelas, chief economist at RSM US, expects the overall economy to grow at about 2.4% if AI spending eases, noting that the slowdown does not necessarily signal a recession.

The shift may also encourage more sustainable development practices. Harry Krejsa added that maintaining political and community support is essential for long-term competitiveness, especially against international rivals.