Data centers took the hardest hit in US midterm votes

Republicans and Democrats were not at the heart of the most obvious takeaway from Tuesday's US midterm elections. Instead, the message was a sweeping rejection of data centers.

Dozens of local ballot questions on data-center construction, zoning, moratoriums and development limits were put before communities nationwide. In nearly every case, the answer from voters was the same: no new projects.

In many places, the margins were remarkable.

• A ban on data centers won 82.5% support in Granville, Ohio.

• In Sunbury, Ohio, 78.6% backed a ban on large data centers, a move that could affect a proposed $2 billion Amazon project.

• Restrictions on large-scale data centers got 79.6% support in Trenton, Ohio.

• Edgewater, Florida, saw 77.6% in favor of banning new data centers and expansions.

• An advisory moratorium won 77.6% support in Bloomington, Illinois.

• In Alhambra, California, 82.4% supported a ban, although counting is not yet complete.

• Voters in Boulder City, Nevada, opposed allowing data centers in a designated development area by 70.6%.

• A development agreement tied to EdgeConneX was rejected by 81.6% in Ashville, Ohio.

• Downe Township, New Jersey, recorded 87.3% opposition to data-center development in an advisory vote.

Four townships in Madison County, Illinois, held votes on allowing data centers. Every one of them turned the proposal down, with opposition between roughly 74% and 83%.

It was not a literal sweep. One measure in North Dakota was reported to have gone the other way, and several places were still counting. Even so, the overall pattern is striking and appears headed to 44 of 45 ballots rejecting data centers, with many pro-data-center candidates losing races elsewhere. The vote looks closer to a 70/30 split, if not 80/20.

One might think the subject on the ballot was toxic waste.

The uniformity of the results is hard to overlook.

The resistance spans party lines and regions alike. The usual objections come up: electricity costs, water use, noise, strain on local infrastructure and the belief that large tech companies accept tax incentives while creating too few permanent jobs.

For financial markets, the trend deserves close attention. Neoclouds stocks NBIS and CRWV fell 4.8% and 6.5%, respectively, today, even as a sharp rebound in stock futures put the S&P 500 up 1.1%.

The boom in AI investment relies on a vast stream of new data centers, plus the power generation and transmission capacity required to operate them. Technology companies have poured extraordinary sums into this buildout, and those spending plans support expectations for semiconductor demand, electrical equipment, utilities and construction.

The votes on Tuesday will not stop that investment. Local bans may be challenged in court, and developers may move projects to jurisdictions that are more welcoming. Some of the measures are also nonbinding.

Up to now, the industry's focus has generally been on the availability of enough chips, electricity and capital for expansion. The election results indicate that getting permission to build may become equally important, and I think a shift is already taking shape in which tech companies have to pay for that consent through costly taxes or contributions such as schools. That is the reverse of the old script, in which companies got tax waivers to build in communities.

There is also a political angle. After voters handed one-sided verdicts against data centers, state and federal politicians may find it increasingly appealing to promise restrictions, stricter permitting rules or stronger protection against electricity-price increases. I think that dynamic applies to AI in general, if not to tech as a whole.

The irony is that the US is spending hundreds of billions of dollars to win the AI race, while voters in communities being asked to host the infrastructure are increasingly rejecting it.

Nasdaq futures advanced 0.4% on the day.