Texas is the fastest-growing data center market in the United States and the site of some of the largest artificial intelligence projects in the world. The Texas AI data center boom now faces a political turn that could slow it down. Democrats won the state’s top races in the midterm elections after making data centers a central issue, and the governor-elect has pushed for a halt on new projects.
Democrat James Talarico won the US Senate seat against Ken Paxton, and Gina Hinojosa won the race for governor against Greg Abbott, the Republican incumbent. The Texas AI data center market became a campaign issue in a state where the projects draw large amounts of power and water. Democrats will also take control of the Texas House for the first time in 24 years. Hinojosa backed tax breaks for data centers in 2023 as a way to boost construction jobs, but during her campaign she began pushing for a full moratorium on new data center work.
Texas AI data center permits stalled in September
The shift began before the election. At the industry’s DCD conference in Ashburn, Virginia, panelists said Texas had been the easiest place to build for years, until September. Developers said the governor’s office had stopped answering their emails. On 21 September, Abbott directed a key state regulator to halt data center permits. Panelists at the conference expected existing projects to slow and new ones to stop altogether. The Texas AI data center pipeline was already the largest in the country when the permits stopped.
The Texas AI data center projects now under construction include two of the largest in the country. The Stargate Frontier data center in Shackelford County is projected to serve 1,820 megawatts, about as much as the largest data center in the country, SpaceX’s Colossus 2 in Tennessee, and more than twice as much as the largest data center now operating in Texas. Nexus Hubbard, also under construction and intended mostly to serve Anthropic, has a planned size of 6,400 megawatts and is the second-largest data center being built in the United States, behind only Meta’s Hyperion project in Louisiana.
Texas AI data center projects face a moratorium push
A moratorium would land on projects that are already under construction, and on plans that have not broken ground. Hinojosa has pledged a halt on data center development until legislation passes covering water, electricity, air and property rights. Voters backed restrictions in many places: Redbud Consulting tracked 44 ballot measures across 10 states seeking to restrict data centers, and 38 passed, Ars Technica reported. Bloomberg estimated about 13 gigawatts of data center capacity in Texas is now exposed to the change. The Texas AI data center buildout was expected to account for more than 41 percent of added capacity in the United States in 2028.
What a Texas AI data center slowdown would mean
The Texas AI data center map does not split cleanly along party lines. Dallas County and others closest to it voted blue, but nearby Ellis County, which leads the state in permitting requests for data centers, voted for Abbott and Paxton. Cameron County, near the southern border and a hot spot for data centers, voted blue after years of voting red. Mitchell and Scurry counties in west Texas voted red. No single office decides whether a project goes ahead, since city governments, county officials and state offices all play a part.
A slowdown in Texas would reach beyond the state. Axios projected that nearly two-thirds of planned data center capacity for 2028 could face delays. Gordon Johnson of GLJ Research warned that projects with power but no state environmental permits could slip by 12 to 18 months. Lenders are also becoming more selective about which projects they fund. Gartner recently estimated that the AI boom is nearly 5 trillion dollars short of paying for itself. The Texas AI data center boom is not over, but the politics around it have changed, and the companies building the largest facilities now have to plan around a state government that may stop them.