The growing backlash against artificial intelligence data centers across the country is prompting technology companies to rethink their approach to development, but analysts say it is unlikely to derail the construction boom, The New York Times reports.
In 40 of 41 local ballot initiatives nationwide, voters supported limiting or preventing data center development, signaling a significant loss of trust between tech companies and local communities. However, investment bank Bernstein estimates that just 2% to 4% of future data centers will be canceled nationwide, while Susquehanna Financial Group expects more AI training data centers to be built in 2027 and 2028 than this year.
New regulations could slow projects and increase costs through requirements for greater transparency, union labor, reduced water consumption, protections against shifting electricity costs to residents and the possible rollback of tax breaks. Microsoft has already begun developing strategies to address community concerns, including drafting model legislation for state lawmakers after polling found roughly 70% of respondents could accept data centers with certain protections.
The industry also faces existing constraints, including shortages of workers, equipment and electricity, that have delayed projects. Smaller data center developers, known as neoclouds, could be particularly vulnerable because of their heavier debt burdens and higher borrowing costs.
Texas, the nation’s largest data center development market, faces particular uncertainty after Gov.-elect Gina Hinojosa called for a moratorium on new projects until lawmakers establish stronger protections. Meanwhile, Amazon, Microsoft, Google and Meta are on track to spend more than $720 billion on data centers and other capital expenses this year, highlighting the economic stakes as policymakers balance community concerns with continued industry growth.
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