Bernstein: US midterms approach: How great is the political risk to data center construction?

How many projects are affected by the elections?

As of the end of September 2026, the US data center project pipeline totaled approximately 433 gigawatts. Of the 36 states holding gubernatorial elections this year, leading candidates in 18 states oppose or favor restrictions on data centers, encompassing 251 gigawatts, or 58% of the total pipeline; the 14 states where leading candidates support or conditionally support them account for just 39 gigawatts.
After incorporating candidates’ prediction-market probabilities of winning, Bernstein estimates political risk exposure at 244 gigawatts, or approximately 56% of the total pipeline, compared with approximately 240 gigawatts last month and approximately 235 gigawatts in June. The firm believes the level of risk has not materially changed since midyear.
This figure measures the risk posed by political positions in the states where projects are located. Separately, Bernstein’s data center team estimates, based on project credibility, that approximately 260 gigawatts of projects are unlikely to be built. The two estimates use different measures.

Polls show that the share of US respondents opposed to new data centers rose from 42% in September 2025 to 75% in August 2026. The environment and household energy costs are the main concerns.
Governors can influence construction through air and water permits, tax incentives and other administrative tools; state public utility commissions decide electricity rates for large users, how grid upgrade costs are allocated and infrastructure approvals; local governments control land zoning and building permits.
Having these powers does not mean a complete halt to construction. The Texas governor called for a pause in relevant permits pending a review of resources and the grid, but implementation was uneven, and some permits continued to advance after the directive.

Bernstein believes the economic activity and jobs generated by construction projects will prompt elected officials to soften their opposition. The firm estimates that the value of data center projects under construction is equivalent to 8% of state-level GDP, with approximately 3% corresponding to wages for skilled construction workers.
There are already policy precedents: Ohio requires some data centers to pay minimum demand charges based on reserved capacity, while Georgia uses longer-term contracts, minimum bills and protections against early exit to require large electricity customers to bear more of the infrastructure costs needed to serve their load.
Such arrangements protect other customers and require developers to make financial commitments earlier, potentially reducing the appeal of speculative development. Bernstein estimates that requiring developers to bear more grid and electricity infrastructure costs would add only a few basis points to their costs.

Bernstein expects related stocks could face immediate selling pressure after the election if candidates inclined to restrict construction win. However, given that AI industrial stocks are already in a bear market and politicians have economic incentives to change their positions, the firm believes market concern about political risk may be excessive.
The firm maintains its outperform ratings on companies including Vertiv, nVent, Johnson Controls and Siemens Energy. Its assessment depends on projects continuing to advance and additional electricity infrastructure costs being addressed mainly through cost sharing rather than a complete halt to construction.