Local Vote Against Data Centres Triggers Global AI Market Sell-off

Harwood, North Dakota, with a population of 794, became the only community in the United States to approve a proposal that would ease restrictions on large industrial developments, including data centres. About 325 voters, roughly three-quarters of those who turned out, rejected a measure that could have slowed a $3bn development by Applied Digital near the town.

The vote stood out amid 47 local referendums on data centres held this week; 46 of them voted to make it harder to build the facilities that power artificial-intelligence systems. Analysts said the results, combined with a wave of anti-data-centre Democratic victories, sent a clear signal that many Americans oppose new data-centre projects in their communities.

The backlash contributed to a broad market sell-off. The Nasdaq recorded its worst day in more than a year and a half, wiping about $2.5tn from the market value of leading tech companies. Shares of Nvidia fell more than 9%, and Dutch bank ING placed a $500m portfolio of data-centre loans up for sale. Japanese investor SoftBank saw its shares drop 11%, while insurance costs for its debt rose to a four-year high after Elon Musk alleged a default on gas-turbine orders for data centres.

OpenAI said it would listen to local concerns and work to keep energy costs down. Meta president Dina Powell McCormick told a conference that “every hyperscaler is now thinking about ‘Do we need to build outside the United States?’”

The AI boom has enlarged data-centre footprints, increasing demand for water and electricity. New Jersey’s energy regulator reported monthly bill hikes of up to 20% last year, attributing the rise to data-centre growth; average electricity bills have risen 31% since 2020. Critics argue that the facilities drive up local costs.

President Donald Trump has promoted the construction of more data centres, warning that communities that oppose them could become “backwards and poor.” Following his 2024 election win, Silicon Valley firms have aligned closely with his agenda, linking the president to an increasingly unpopular AI sector.

Democratic lawmakers introduced a bill in March calling for a national moratorium on new data centres. Campaign advertising on the issue totaled about $380m, three-quarters of which was spent by Democrats. In Ohio, newly elected Senator Sherrod Brown highlighted data-centre opposition in his campaign, and 56% of voters said the issue influenced their choice.

Democrats are expected to pursue restrictions, with some governors already promising moratoriums. Congressional Representative Yassamin Ansari called for an immediate pause on advanced AI development and regulation of the industry. Analysts at UBS cautioned that outcomes may be less severe than campaign rhetoric, while ING’s Coco Zhang noted that, with Trump in the White House, AI remains a key driver of U.S. economic growth and competition with China.

Investors remain wary of a potential AI bubble, and the recent market moves could foreshadow further volatility. Elon Musk, who has funded Republican candidates, suggested that “data centres in space” look appealing after the results.