AI Data Centers Face a Voter Revolt

0:00Will Parker: What we noticed more is that we've moved AI off the screen into the physical world. That's Tanguy Katlan, senior partner at McKinsey and director of the McKinsey Global Institute. AI, he says, no longer lives in a computer, but is tangible in robotics, engineering, space travel, and more. One of the 14 key points identified by McKinsey in its 2026 Technology Trends Outlook. At the break, join McKinsey to learn how these trends are shaping innovation and how leaders should respond.

0:33Will Parker: Welcome to Tech News Briefing. It's Friday, November 6th. I'm Julie Chang for The Wall Street Journal. Across the country this week, voters delivered a message to Silicon Valley. Not in my backyard. Opponents of the data centers powering the AI boom scored sweeping victories at the ballot box.

0:54Julie Chang: Many of the candidates that ran with the anti-data Center and Message are now celebrating wins. You see, AI and data centers, what major factors for a majority of Americans as they cast their vote.

1:05Will Parker: The Democratic sweep, though, is raising some pressing questions, right, about data center construction and the implications it's going to have for the neoclouds. But what will these election results mean for projects already underway? And what will it mean for the companies who have gone all in on the AI boom? WSJ reporter Will Parker joins us now to discuss. Will, walk us through some of these results.

1:28Julie Chang: So on Tuesday, data centers were on the ballot in a couple of different ways. One was directly, as in people were asked in towns across the Midwest, Ohio, Illinois, and also Kansas and in the South and Florida, they were asked, do you want data centers here? And in most of those ballot questions, actually almost all of them, people said, no, we do not want data centers here. But beyond that, data centers are on the ballot in the form of candidates for governor and for Senate and for the House who ran campaigns that were very data center skeptic or just very anti-data center more broadly. Many of those candidates won those races.

2:10Julie Chang: The candidates of note here were governors, and they were in states that are some of the busiest for artificial intelligence data center construction. That includes Texas, where Gina Hinojosa ran a very data center critical campaign and won by a really significant margin.

2:28Will Parker: Is Texas a state by and for the people? Or is this the billionaire's world and we just live here? That is what the data centers represent, the one fight that this election is about.

2:42Julie Chang: Ohio, where Amy Acton, Democrat there, won. It includes a gubernatorial race in Michigan. And then also Georgia, where Keisha Lance Bottoms won her race. Huge state for data center construction that's really focused around kind of the periphery of Atlanta.

2:58Will Parker: Do we have a sense of how big of a factor data centers were in people's votes this election?

3:02Julie Chang: So there was exit polling that showed that like 56 % of American voters said that data centers were an important factor in their choices for Congress. And that was pretty significant because even though we know that people don't like data centers broadly, it's only a certain share of the population that lives in proximity to them and have told people that they wouldn't want them in their community. but over half of the country's voters said that data centers were on their mind when they picked for Congress. I think it shows even for people who are not living directly near the data centers, they still see what's going on in communities that are maybe like 45 minutes an hour down the road and are thinking, wow, I wouldn't want all of that happening where I am and relate to it.

3:48Julie Chang: And so it was definitely a motivator for a large number of voters.

3:52Will Parker: I'm curious, have there been instances in the past where so many voters were aligned against something so quickly?

3:59Julie Chang: There's obviously a rich history of opposition to different types of industry, right? Factories, pollution, fracking more recently, opposition to housing, construction, people being opposed to density, apartment buildings. But the data center opposition is just broader and more spread out and more bipartisan. I mean, this is not a movement that is mostly being guided by environmentalists. It's people on Facebook groups who are often not involved in politics at all until the data center thing comes along and then they're super motivated. And I think in addition to all of the things that people worry about, you know, electricity costs, potential issues with the water, home values, especially in these kind of suburban exurban areas, it comes up all the time.

4:44Julie Chang: The data center is also the only visible material manifestation of AI and people's anxieties and sort of misgivings about this technology and what it's going to do. It's a thing that they can see and react to and push back against often in a way that they cannot or don't really have a means to when you're just talking about whatever's going on in Silicon Valley or a chatbot or whatever. So I think that is another aspect to this that makes it unique from industrial opposition in the past.

5:18Will Parker: Given that context and your own reporting on data centers, did any of the results surprise you?

5:24Julie Chang: I think I would have to say yes. Yes. I mean, the margin of victory in Texas, I can't, of course, all be attributed to data centers, but I think people were surprised about the extent to which the Democrats won in some of these key states for data center developers. I think probably people in the data center industry are a little surprised as well.

5:42Will Parker: Shifting gears a bit, in terms of what happens next, does this mean data centers currently under construction are on pause? Will they be completed at some point?

5:51Julie Chang: So that's a really good question. This is a thing that people feel there's a good deal of uncertainty about, but probably not, I think is the best answer. Generally, when moratoria are passed, projects that are underway are not affected. And there's just a ton of data center construction that is already underway and is just in the early stages of being built. But I think the main concern is for projects in the planning stages, like somewhere like Texas, where there's a ton of that. Texas, Ohio, and Georgia, just those three states, account for something like 40 % of total data center development.

6:27Julie Chang: And there's a lot in the planning stages for those places, especially Texas. So there's a big question now, if the Texas state legislature and the new governor work out some sort of moratorium, does that delay the build out in Texas by an extra year or 18 months or whatever it may be? So everyone is asking the same question about what will this mean in practice? And there's really not any good indication yet.

6:50Will Parker: Were data centers an issue you voted on this week? If you're a listener on Spotify, let us know in the comments. Coming up, what the anti-data center wave means for the tech companies powering the AI boom. That's after the break.

7:10Will Parker: AI is delivering tremendous advances in areas like scientific discovery and engineering. But as Tanguy Katlan, senior partner in McKinsey and director of the McKinsey Global Institute notes, breakthroughs only happen when leaders set the table effectively. You can only optimize and improve the performance of the system if you improve every single component of the system. to really unlock the full potential of those technologies, you're going to need to start from a blank sheet and design the processes and trends. Later, Katlan explains how leaders identify the trends that matter most to their businesses.

7:44Will Parker: Welcome back. We've been talking about how voters elected candidates and supported ballot measures to ban or slow data center development. Will, we saw shares of data center companies fall immediately after the election. Is that still the case?

7:59Julie Chang: Yes, you've seen shares of some of the big companies in this space, Intel, AMD, and several others continue to slide even beyond what was seen last week. a lot of uncertainty about the new candidates and the ballot initiatives, what it means for some of these big states where the AI buildout has been so busy, and then just pre-existing concerns over the debt levels that some of these companies are carrying and the ability of financing and to keep the money flowing to data center construction. So yeah, that's ongoing.

8:34Will Parker: I want to talk about the tech companies specifically. With the election results and them needing to continue building out these data centers because they still need that compute. What are their plans? What have they said about what they're going to do in response to this?

8:48Julie Chang: Yeah, we had some reporting the other day from inside OpenAI that the conversations were already starting on election night about whether they simply wouldn't be able to meet their targets for data center construction and whether this was going to become an issue. Already, people have been talking about whether to look outside of the U.S. and Anthropic in their S1 had a paragraph in there about exploring opportunities outside of the U.S. due to opposition. But it's easier to overstate that a little bit, I think, because, you know, if a few states close for business on the data center front, there's a bunch of other states that people will flee to and start buying the land and paying for the power to build.

9:28Julie Chang: That takes a long time, obviously. But there's still a lot of land out there to put data centers on. We'll see where it goes from here.

9:36Will Parker: I want to zoom out and talk a little bit about the economy here. So what kind of impact could this have on the economy considering much of the AI build-out is now tied to it?

9:46Julie Chang: Yeah, I mean, especially in construction and what we've seen for the last couple of years is that growth in the construction of like, say, office buildings or housing, apartments, all these other things is not growing. In some cases, it's declining. But the data centers are filling that space and basically the main growth for construction. And so construction employment and buying HVAC units and everything that has to be purchased and done for buildings. If that slides overall, you'd see a decline in construction employment potentially, and there'd be ripple effects to other parts of the economy that are closely tied to construction suppliers and all of that.

10:24Julie Chang: But again, there's not like a real reason to believe that you'd see that soon, just given how much activity is underway and in line to continue. Goldman Sachs projects that the data center build out is something like 2 % of GDP in 2026. And that's a sector that's been growing where a lot of the other parts of the economy have not. And it's also a significant number that 2 % because according to some estimates, the last time that the build out of a brand new industry accounted for that much of GDP was the railroads in the 19th century. So it is not the whole economy, but it is a huge source of growth in this current economy.

11:07Julie Chang: And that is pretty important.

11:09Will Parker: It's not nothing.

11:10Julie Chang: It is not nothing.

11:11Will Parker: So, Will, you're going to keep following the story. What will you be watching for going forward?

11:17Julie Chang: I'm curious to see if there are more states now, more towns that see what happened on election night and feel emboldened to do something similar? And do they go in a more kind of anti-data center direction? And to see if this becomes not just a Texas, Ohio, Georgia story, but many other states going in that same direction.

11:39Will Parker: That was journal reporter Will Parker. And that's it for Tech News Briefing. If you're a listener on Spotify, be sure to leave us a comment. Today's show was produced by me, Julie Chang. Additional support this week from Pierre Bien-Aimé, Anthony Bansy, and Melanie Roy. Jessica Fenton and Michael LaValle wrote our theme music. Our supervising producer is Katie Ferguson. Our development producer is Aisha Al-Muslim. Chris Zinsley is the deputy editor. Vita Malad is our Senior Director of Shows, and Samantha Hennig is the Wall Street Journal's Head of Multimedia. We'll be back Monday morning with a new episode.

12:19Will Parker: Thanks for listening.

12:26Will Parker: Autonomy, absorption speed, cybersecurity, co-design of chips and models, unlocking the capacity that we need in the grid and energy. That's McKinsey's Tanguy Katlan, discussing five key themes outlined in McKinsey's 2026 Technology Trends Outlook, a comprehensive view of what's shaping today's tech landscape and where we might be tomorrow. Leaders, Katlan says, can examine the 14 trends McKinsey identifies and apply the learnings to their unique business context without chasing headlines. The competitive advantage comes from the intersection of proprietary data, workflows, and the ability to rewire the operating model, not from the trend that get the most capital or gets the most attention to press.

13:06Will Parker: It's how you're going to redesign your end-to-end workflows, take advantage of your own proprietary context and data, and the ability to rewire the operating, whether that's skilled or talent. That's where, actually, you win. For more, visit McKinsey.com. This content was created by Custom Content from WSJ, a unit of the Wall Street Journal Advertising Department.