BMI sees slowdown risk in 53% of data center pipeline growth

Roughly 53% of US hyperscaler data center pipeline growth is now exposed to slowdown risk, BMI estimates, because that growth is concentrated in states where governor races flipped in this week's midterm elections.

The analysts expect friction to arrive through state and local political intervention rather than a substantial national policy shift, and call a broad national moratorium unlikely. BMI expects regulatory friction for new data centers to intensify at the subnational level through the end of 2028. Data Center Dynamics reported the findings on Nov. 5.

For allocators underwriting data center development, the estimate moves the diligence question from 2027 to 2028. BMI says construction schedules for next year are largely locked in, so the exposure lands in projects that have not yet cleared entitlements. Texas is the near-term test: BMI believes a construction pause imposed by outgoing governor Greg Abbott could plausibly extend into late 2027 as incoming governor Gina Hinojosa takes office.

The markets commanding the largest pipelines from 2028 onward are likely to be Texas, Georgia, Ohio and Pennsylvania, according to the report. Texas, Georgia and Ohio elected Democrats with public anti-data-center stances, while Pennsylvania re-elected Josh Shapiro, who introduced restrictions on data centers over the summer. Local moratoriums and restrictions were backed around the country, and 56% of voters polled by NBC said the AI data center build-out was a major factor in their decision. Nationally, Democrats gained control of the House and Senate.

BMI analysts wrote: “Given that the governor races have flipped in these states, we estimate that 53 percent of pipeline growth is now exposed to slowdown risk.”

The effect on hyperscaler capex is unsettled. BMI says a slowdown in the AI buildout would push its capex forecasts down as volumes compress and imposed moratoria push back 2028 project starts. It sets an opposing case in which Democrats take a more measured approach to AI legislation, and treats the two effects as in tension. How vigorously Democrats pursue tighter AI legislation remains to be seen, the analysts say.