Texas Freeze on Data Centers Hits AI Buildout

Democrats swept Texas' midterm elections, winning the governorship and other key offices, and the new administration plans to block new data center connections, threatening the state's AI infrastructure boom. The market reacted selectively, with AI infrastructure stocks falling sharply while broader indexes rose. Data center developers with Texas projects, like Cipher Digital and Hut 8, dropped over 16%, as Texas accounts for nearly 30% of U.S. data center capacity expected by 2028. Governor-elect Gina Hinojosa campaigned on halting approvals until new rules protect communities and household bills, and eliminate tax incentives. Some developers had already begun exploring alternatives like Utah and Georgia after the outgoing governor froze permits, but the shift is now more permanent.