Democrats’ victories in Texas laid bare voter unease over data centers — and signal new hurdles for the industry

A strong showing by Democrats in Texas swept Gina Hinojosa into office as the state’s first Democratic governor since 1990 in a contest closely watched by Big Tech companies. 

Texas is considered a bellwether for government restrictions on AI data centers and was just one place where deep voter unease over the build-out was on display. Voters across the country passed a series of local ballot measures aimed at restricting construction in the years ahead.

Hinojosa, Texas’s first Latina governor, has pledged to impose a moratorium on data center construction in Texas, which accounts for more than 25% of planned US capacity by 2030.

“I want to say something to the powerful people who have gotten very comfortable running this state,” she told supporters in her victory speech. “The voters have delivered a mandate for change, and it is change they will get.”

Her victory was one of a series of wins for Democrats in Texas. The party is also on track to take control of the Texas House, which would give Hinojosa more power to follow through on restrictions even as the state Senate appears set to remain under Republican control.

“We view the Texas gubernatorial race as particularly important for the next leg of the AI trade,” wrote Raymond James’s Ed Mills in a pre-election note saying that a strong Democratic showing there “could signal a broader electoral wave while increasing concerns about data center moratoriums and more restrictive AI regulation in the nation’s largest planned data center development.”

Bank of America called the race “one of the highest impact elections for the entire utility sector.”

A race that ‘could make a real difference’

Hinojosa made opposition to data center construction a central part of her campaign, charging in one ad that Gov. Greg Abbott “works for” Elon Musk.

She staked out plans for a moratorium on new data center construction, stricter regulations on water and power usage, and an end to tax breaks.

Abbott was seeking his fourth term as governor and said last year he wanted Texas to be the “epicenter of AI development.”

More recently, he announced a moratorium of his own and said he would support more stringent requirements on power and water usage. Hinojosa immediately charged that Abbott’s new proposals amounted to an “election year pause.”

Tobin Marcus of Wolfe Research said Texas “is the one state with enough scale and enough difference between the candidates that it could make a real difference.”

Voters who feel ‘AI will do more to hurt society’

The race reflected a national mood that has turned sharply against data centers in recent months.

NBC exit polls on Tuesday showed that 57% of voters felt “AI will do more to hurt society” compared to just 24% who said it would help.

A UMass Amherst Poll in September also found nearly two-thirds of Americans oppose AI data center construction in their communities, with just 11% of voters welcoming them

On Tuesday, voters weighed in on data center ballot measures in contests spanning 13 states, from Arkansas to Wisconsin.

One tracker counted 28 measures before voters to limit data centers. On Wednesday morning, with votes still being counted, virtually every one was on track to pass. In Ohio alone, voters in at least 14 municipalities passed bans or other restrictions.

In the Ohio Senate race, voters elected Democrat Sherrod Brown, who, like Hinojosa, made opposition to data center construction a key part of his campaign message.

“I do not work for the utility companies, I do not work for data centers,” Brown said as he declared victory on Tuesday night.

Even Elon Musk seemed to acknowledge the dour public sentiment toward data centers. He quipped in a post early Wednesday as the results became clear, “data centers in space looking pretty appealing right now.”

This story has been updated.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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