More than half of the US hyperscale data center pipeline could face heightened regulatory friction following the 2026 midterm elections, analysts at BMI believe.

But the firm said this is likely to take the form of political interventions, rather than a substantial policy shift, and that a broad national moratorium on new digital infrastructure projects remains unlikely.

Tuesday’s elections saw the Democrats gain control of the House and the Senate from the Republicans, as well as flipping a number of gubernatorial results from red to blue. Local moratoriums and restrictions were backed across the country, with 56 percent of voters polled by NBC saying the AI data center build-out was a major factor in their voting decision.

Midterm elections will bring friction, could hit capex

BMI believes regulatory friction for new data centers will intensify at the subnational level through the end of 2028, with roughly 53 percent of hyperscaler pipeline growth concentrated in “newly flipped governor states” such as Texas, Georgia, Ohio, and Pennsylvania.

Texas, Georgia, and Ohio all elected Democrats with public anti-data center stances, while Pennsylvania re-elected Governor Josh Shapiro, who introduced a plethora of restrictions on data centers over the summer.

In a new report on the impact of the elections, BMI analysts said: “Construction schedules for 2027 are largely locked in, placing the focus on 2028 and beyond.

“With respect to hyperscaler buildouts, the markets commanding the largest pipelines from 2028 onwards are likely to be Texas, Georgia, Ohio and Pennsylvania. Given that the governor races have flipped in these states, we estimate that 53 percent of pipeline growth is now exposed to slowdown risk.”

Texas is already under a data center construction pause imposed by outgoing governor Greg Abbott, and BMI believes this could “plausibly extend into late 2027” as new governor Gina Hinojosa gets her feet under the table.

When it comes to hyperscaler capex, the impact of the elections “remains to be seen, as two opposing effects are currently in tension,” the BMI report said.

“On one hand, a slowdown in the AI buildout would clearly exert downward pressure on our capex forecasts, as volumes compress and imposed moratoria push back 2028 project starts, though the vigor with which Democrats pursue tighter AI legislation remains to be seen,” the analyst company said.

“On the other hand, should Democrats adopt a more measured approach, pursuing a slower but more expensive buildout via tax increases and bring your own power requirements, tighter regulation could actually exert upward pressure on capex figures, since the all-in construction cost of each facility, combined with power procurement costs, would ultimately add to the overall capex bill.”

Cleanview: 41 percent of US data center projects under threat

Market intelligence firm Cleanview foresees similar issues. Its analysis found that newly elected governors could pause 41 percent of planned US data centers.

Writing on X, the firm's founder Michael Thomas said: "Tuesday’s results don’t signal the end of the data center boom. They will, however, likely bring a pause in some of the largest markets and new regulations across the country - even in traditionally laissez-faire states like Texas."

Thomas said his firm's analysis shows that 159GW of planned data centers are in states where new governors back a pause.

He said: "That's 41 percent of the country's planned data center pipeline. Another 69.2GW (18 percent) is in states where the winner wants to change tax breaks or other rules but hasn’t backed a pause."

Clearview also foresees an impact on power projects. Thomas said there will likely be "more clean energy in some states and fewer on-site gas plants in others."

He explained: "On-site gas plants will likely face new rules and delays. To build an on-site gas plant, a developer needs an air permit. That approval often goes through offices controlled by the executive branch, which means new Democratic governors could delay or block those permits."

Developers may also be forced to buy more clean energy, with Thomas citing candidates such as David Crowley, the incoming governor of Wisconsin, who has called for 100 percent renewable energy as a condition for approving data center projects.