Voters approved at least 44 of 47 ballot measures across the country to restrict data center construction, from outright bans to temporary moratoriums, in what experts say will fuel continued stock market volatility tied to concerns over artificial intelligence development. The election also elevated candidates who campaigned on stricter data center regulation, including Texas Gov.-elect Gina Hinojosa, who promised to halt new data center construction until more safeguards are in place. Texas has become a leader in the data center market, accounting for 25% to 30% of the capacity expected to come online by 2030, with 169 operational facilities, 118 under construction and more than 500 planned. Georgia's Democratic Gov.-elect Keisha Lance Bottoms said she would sign an executive order to pause new data center construction once she takes office in January.
The political shift alarmed investors, who worry that slowing data center buildout could throttle one of the economy's main growth engines. Stocks rebounded on Friday morning after plunging on Thursday, a drop that put the tech-heavy Nasdaq into correction territory and erased post-election gains. Joe Maher, a markets economist with Capital Economics, said the midterm shock "strengthens our sense that the boom is in its final innings." The AI boom has driven the stock market to record highs, so reversals could dent millions of Americans' retirement savings and hurt consumer spending, which accounts for roughly two-thirds of U.S. economic activity.
CBS News reported that post-election stock gains reflected the overall election results, while subsequent losses reflected investors digesting the ballot measures against AI infrastructure. Jill Schlesinger, CBS News business analyst, said the market reaction showed "people are nervous about AI" and that "repudiation of the AI story" hit not just AI companies but also data center builders, chip suppliers and AI financiers, with spillover effects across other market indexes. She warned that interconnectedness in the sector, combined with heavy borrowing, means "if they aren't profitable yet, they owe all this money, what does that mean about the value of the company in and of itself?"
OpenAI responded to the backlash by announcing plans to build trust with local communities and work with them on data center development. The company said it would stop using nondisclosure agreements with public officials and provide residents access to construction plans. President Trump said he is "100% in favor" of AI and vowed to work with states that want to "become RICH" from data centers. Nigel Green, CEO of investment advisory firm deVere Group, warned that "when everyone owns the same stocks, it takes very little to spark a rush for the exit, and the exit narrows fast."