U.S. Elections Could Slow the Data Center Boom: Barron's Identifies 7 Stocks at Risk

On November 3, residents of several U.S. states will vote in elections and on ballot measures that could tighten regulations on the construction of artificial intelligence data centers and limit the profits energy companies derive from such projects, according to Barron's. Which stocks might be affected by the voting results?

The outcome of the Texas gubernatorial race could prove to be the most significant for the market, as incumbent Republican Greg Abbott faces an unexpectedly strong challenger—Democrat Gina Inohosa. Inohosa has named ending the “costly madness of data centers” as one of her three priorities and, according to a New York Times/Siena poll released on Sunday, is leading in the polls. However, her lead falls within the margin of error, and Abbott had previously led in most polls.

In August, Abbott imposed a temporary moratorium on the approval of new data centers, citing the need to audit operators. Inohosa considers this measure insufficient and insists on a complete suspension of construction until stricter laws are enacted, including the repeal of tax breaks.

Tighter regulations in Texas could limit revenue growth for Sempra, which is actively investing in power grids in the western part of the state, utility companies CenterPoint Energy and American Electric Power, which are benefiting from rising electricity demand in the region, as well as Fermi, which is building large data center campuses. Oracle, which relies on power supplies for its data centers in Texas and Arizona, may also come under pressure, according to Barron’s.

Two more important votes will take place on the composition of the public utility commissions in Georgia and Arizona: these bodies set rates and decide whether energy companies can pass on the costs of their investments to consumers. In Georgia, Democrats could secure a majority on the commission, having already won two seats a year earlier—a move that could limit Southern Co.’ s profit growth from serving data centers in the state. The company claims that data centers lower rates for other consumers, since large technology customers pay more for electricity than others, and has pledged to keep rates unchanged through 2028. But Morningstar analysts warned last week of mounting regulatory pressure in Georgia, which accounts for about two-thirds of Southern’s profits and planned investments.

In Arizona, a Democratic victory in the election for a similar commission could curb the growth of Pinnacle West, which is also attracting significant interest from data center operators, according to Barron's.

Issues related to data centers are on the ballot in 10 states, and across the United States, a total of 41 initiatives have been put forward, allowing local residents to have a say on the construction of these facilities in their neighborhoods. Ohio will host the most of these votes—21 in total.

At the federal level, the industry is better protected: President Donald Trump supports the development of AI and will likely oppose attempts to curb its growth, the publication notes. Six votes on data centers held earlier this year in New Hampshire, Wisconsin, California, and Michigan did not go in the industry’s favor: in all cases, voters supported new restrictions on the construction of such facilities.

This article was AI-translated and verified by a human editor