Voters dealt AI's data center boom its biggest setback yet. Now comes the economic reckoning.

Voters across the United States used last Tuesday's midterm elections to deliver the clearest verdict yet on the AI data center boom: slow it down. Democratic candidates swept governor's races while local ballot restrictions passed by near-unanimous margins — outcomes that together now put at risk the largest investment surge in modern American history, one that economists say has driven as much as a quarter of all US economic growth this year.

The scale of the rebuke was difficult to overstate. Of 41 local ballot measures across 10 states, only one went in favor of development, with voters elsewhere backing restrictions or rejecting pro-development measures in every other case, according to a Ballotpedia analysis and results compiled by CNBC. Measures limiting or blocking data centers cleared the bar in at least 38 jurisdictions, often by commanding margins, The Washington Post separately reported. In Granville, Ohio, a charter amendment restricting data center construction passed 82.45% to 17.55%. In Pataskala, it was 73.62% to 26.38%.

The statewide results were equally striking. Running on a moratorium on new data center projects and stronger protections for electricity ratepayers and the environment, Democrat Gina Hinojosa unseated Republican incumbent Greg Abbott in Texas — a state that accounts for roughly a quarter of America's planned AI infrastructure buildout. In Ohio, Democrat Amy Acton won the governorship on a platform supporting a moratorium and stricter regulations. Greater accountability for data center developers was a centerpiece of the campaign run by Georgia Governor-elect Keisha Lance Bottoms. Democrats also flipped the governor's office in Nevada.

By January, 45% of America's planned data center capacity will fall within states governed by Democrats who back expanding or extending AI construction moratoriums, Goldman Sachs projects.

This is a rare case where state and local leaders have influence of geopolitical-level import.— Harry Krejsa, Director of Studies, Carnegie Mellon Institute for Strategy & Technology

The economic stakes are enormous. Columbia Business School economist Stijn Van Nieuwerburgh projects AI infrastructure spending will near $1 trillion annually for the foreseeable future — a share of US GDP that would surpass every other investment boom in modern American history, railroads included. According to Wells Fargo, a 10% cut in planned Texas data center capacity alone would lead Big Tech companies to trim their overall AI infrastructure spending by 1.6%.

The tools available to incoming governors are substantial. Among the options governors-elect are weighing: eliminating tax breaks — Texas's sales tax exemption for data centers carries a projected price tag nearing $3.3 billion, according to Good Jobs First — along with tighter climate and electricity rules and authority for local governments to impose their own moratoriums. Projects still waiting on permits, utility service, or tax incentives face particular vulnerability, according to Mona Dajani, co-chair of Cooley's infrastructure, energy and real estate practice. Even active construction projects could be threatened: while Texas law grandfathers in some permits, that protection does not cover state permitting changes or electrical service guarantees that Governor-elect Hinojosa could vacate.

People really understood — especially the rural counties understood — that the same people who are closing our schools, who are telling us we don't have money, are also giving billions to data centers.— Matthew Rodriguez, Co-founder, Amanecer People's Project, El Paso, Texas

The opposition that crystallized on Tuesday was, notably, not a partisan phenomenon. Before the election, a Washington Post-ABC News-Ipsos poll found that opposition to new data center construction in respondents' own communities reached seven in 10 Americans overall — a figure that included a majority of Republicans. Texas Republican Governor Greg Abbott had himself already imposed a data center moratorium before losing his seat. Jessica Baker, co-founder of Conserve Ohio, a bipartisan grassroots movement, described the Ohio results as a message to the state that the majority of the people do not want this.

I mean, these were not just barely wins. This sends a message to the state that the majority of the people do not want this.— Jessica Baker, Co-founder, Conserve Ohio

The industry spent heavily to fight the tide. Leading the Future — an AI-industry-aligned super PAC backed by donors that include Andreessen Horowitz, OpenAI co-founder Greg Brockman, and Palantir co-founder Joe Lonsdale — channeled millions through affiliated organizations into races stretching from South Carolina to Arizona. Its affiliate Build American AI spent at least $2.54 million on television ads in Ohio alone, according to an analysis by DeSmog. Nearly half of the close to half a billion dollars Elon Musk spent across the election cycle was directed at Texas races. The returns were meager: in South Carolina, Democratic challenger Annie Andrews, who had called for a two-year moratorium on data center construction, defeated Republican incumbent Darline Graham.

The results do not mean construction stops immediately. President Trump remains in office and has railed against any attempts to stymie AI's growth, citing economic and national security concerns — particularly in the competition with China. Democratic governors could not stop every data center from being built even if they wanted to. And demand for AI services continues to surge. Even so, the election marks a meaningful change in the pace and direction of the buildout; Dajani noted that delays carry real financial costs — interest, equipment commitments, and utility expenses keep accumulating while a project sits idle — and that some existing projects could eventually become financially unworkable.

There is also a case that some slowdown was already warranted. According to Stanford University's AI Index Report, the United States had 5,427 data centers at the end of last year, and while AI companies have announced plans for 3,969 more, only about 800 are under construction, and AI experts have raised doubts about the viability of many announced projects. CoreWeave, a neocloud company that rents out computing capacity, recently projected losses so extensive that its bond yields surged to 15% — while its expected return on investment was only around 9%, according to CNN. Stocks of major AI-linked companies have also been under pressure as investors grow impatient with spending levels.

After the election, OpenAI announced a set of commitments: covering the full cost of powering data centers it owns and operates, seeking community input, making construction plans public, and refraining from using nondisclosure agreements with public officials. Lawmakers were also offered a policy blueprint the company released, encouraging them to adopt comparable standards. According to CNBC, OpenAI Chief Global Affairs Officer Chris Lehane described the blueprint as "really laying out the best lessons that we have learned and committing to applying them as they go forward." Tuesday's results preceded the announcement, though work on the blueprint had begun in August.

Affordability, jobs, and the economy are priorities for Americans across the country.— Dan Diorio, Executive Vice President of State Policy and Government Affairs, Data Center Coalition

What happens next will depend heavily on how quickly new governors move to implement moratoriums, whether the federal government intervenes, and whether the industry can make a more persuasive case to communities that have so far voted overwhelmingly against it. Kansas and Alaska, where results were still outstanding, each looked likely to join the list of states electing governors who have called for moratoriums. The shape of America's AI infrastructure — and the economic growth it has been generating — may look considerably different by the time those new governors finish their first terms.

Why it matters — The election results put 45% of America's planned AI data center capacity under the authority of governors who support moratoriums, threatening an investment boom that economists say has driven up to a quarter of US economic growth this year.

Reported by cnn.com, axios.com, bloomberg.com, economist.com, usatoday.com, foxbusiness.com, theatlantic.com, techpolicy.press, washingtonpost.com