After the midterm elections, the pricing logic for data centers has shifted: bidding farewell to disorderly expansion, moving from competing on growth to competing on scarcity
Original author: Zhao Ying
Original source: Wallstreetcn
The core pricing anchor of the data center industry is changing. The policy shift following the U.S. midterm elections has rapidly redirected market attention from new capacity to the scarcity of already-built, already-approved, and under-construction assets.
According to the Trading Desk, JPMorgan noted in its North America Credit Research report on November 4 that Democrats gained control of the House and Senate and won gubernatorial races in key data center states including Texas, Georgia, New Mexico, and Nevada. Meanwhile, of 45 local ballot measures restricting data centers, 42 have passed or are leaning toward passage.
This means that data center developers face higher approval thresholds, longer construction cycles, and more complex local political constraints. The expansion narrative that the market previously favored is being repriced around permitting certainty, power access, and already-delivered capacity.
For investors, the most directly affected areas include high-yield project finance, independent power producers, bridging power providers, and data center developers. JPMorgan expects limited changes to 2027 capital plans, with the real pressure concentrated in projects slated for 2028 and beyond.
Policy Shift Raises the Bar for New Projects
JPMorgan stated that the "blue wave" has far-reaching implications for the data center and power industries. Gubernatorial campaign platforms deserve particular attention, as policy shifts after election typically do not immediately deviate from campaign promises.
In Texas, Gina Hinojosa explicitly proposed an immediate moratorium on new data centers during her campaign and pledged to give local communities more decision-making power over development. She also emphasized rate freezes and strengthened scrutiny of data center infrastructure to control residential electricity costs.
In Georgia, although Keisha Lance Bottoms did not make data centers a core policy issue, she previously supported a moratorium on new data center development of "one to six months or longer" to assess their long-term impact on the state. Senator Jon Ossoff took a tougher stance, advocating a full moratorium and an investigation into data center development in Georgia.
In New Mexico, Haaland's platform calls for pausing new large-scale projects until clear regulatory guardrails are established. In Nevada, Ford proposed suspending data center tax incentives, setting employee wage and benefit standards, and requiring data centers to bear the additional costs of residential electricity rate increases. In Ohio, Acton supports a conditional moratorium, requiring data centers to cover 100% of utility costs, use union labor, and increase operational transparency.
Local ballot results reinforce this trend. JPMorgan, citing Ballotpedia data, noted that of 45 local ballot measures restricting data centers, 42 have passed or are leaning toward passage, with only one failing in Harwood, North Dakota, and two others yet to report results.
These measures are concentrated primarily in the Midwest, taking the form of MW caps, voter approval requirements, or outright development bans. By state, Ohio has the most with 20 measures, followed by Illinois and Maine. The report suggests that given the success rate and public engagement in this round of local ballots, similar restrictive measures could spread further by 2028. JPMorgan quoted one observer as saying, "The 2028 election has already begun."
Premiums Rise for Built Assets; Approved Projects Gain Relative Advantage
The pricing logic of the data center market has therefore shifted. JPMorgan stated that data centers and power infrastructure that are already built, fully permitted, or already in the construction phase are now worth more than they were before the election.
The report quoted one trader as saying, "The market used to pay a premium for investment-grade leases; now it will pay a premium for assets that are already built." This captures the shift in investor focus: contract quality still matters, but deliverable capacity and permitting certainty are gaining greater weight.
In key states such as Texas, Georgia, New Mexico, and Nevada, the path to obtaining permits and completing construction for new data centers is expected to be more difficult, slower, and more costly. JPMorgan believes the probability of moratoria ultimately becoming permanent bans is limited, but the pace of industry expansion has already been materially affected.
Relatively friendly jurisdictions may attract more attention. The report named Louisiana and North Dakota as states that could attract developer investment and access market capital at more attractive costs. At the same time, as the U.S. development environment becomes more complex, international data centers may also receive more attention.
Some already-approved or already-launched projects are less affected. JPMorgan noted that Vistra Energy's 2.6 GW project in Ohio and Pennsylvania tied to Meta has already advanced, involving nuclear power assets, making it relatively resilient to potential moratorium policy impacts. In Georgia, Georgia Power's 3.2 GW project tied to OpenAI has been approved by the Georgia Public Service Commission and is expected to break ground by the end of 2026. The report considers this project relatively safe.
In Texas, American Electric Power's Texas unit may receive some support. The company recently raised its approved data center development pipeline in the state to 1.6 GW. By contrast, projects that have not yet been approved, financed, or entered the construction phase will face higher discounts.
Texas Becomes Investor Focus
In the high-performance computing and high-yield project finance space, investors are most focused on regulatory changes in Texas. JPMorgan noted that approximately 27% of financed data center capacity in the high-yield project finance market is under construction in Texas.
Risks are concentrated in projects slated for energization in 2028 and 2029. These projects may face delays or, in extreme cases, termination. The unfinanced project pipeline has also become more uncertain, with financing difficulty increasing.
Among the listed high-yield data center builders tracked by JPMorgan, approximately 78% of the pipeline is located in Texas, primarily involving Cipher and Galaxy. The report states that this makes Texas policy changes one of the most important variables in the data center credit market.
Neocloud companies also face indirect risks. If data center construction is delayed, capacity onlining timelines will be pushed back, affecting contract execution schedules. According to public information, CRWV's leased or planned data centers in the U.S. are located in North Dakota, Illinois, Georgia, Texas, North Carolina, Oklahoma, Virginia, and New York, and it owns data centers in Pennsylvania and New Jersey; its international projects involve the UK, Denmark, Indonesia, India, and Canada.
Power Industry Under Pressure; Bridging Power Affected Sooner
A slowdown in data center development will first affect power demand expectations. JPMorgan expects most independent power producers may come under pressure, especially those with high exposure to Texas, Ohio, Pennsylvania, and Georgia.
The report notes that most states have not directly banned data center development, but approval thresholds for new projects will be higher, giving already-approved projects a clear advantage. A slowdown in data center development could depress power prices, though meaningful new generation capacity is not expected until around 2029.
Bridging power and behind-the-meter power providers may face greater near-term impact. JPMorgan stated that extended data center construction cycles will weaken demand for bridging power solutions, particularly in Texas and the PJM market.
Regulated utilities are relatively mildly affected. The report noted that data center demand had previously supported EPS growth expectations of 6% to 9% for some utility companies, but a pullback in related capital expenditure could also ease balance sheet pressure, particularly against the backdrop of capital investment expected to grow at least through 2030.
Bond Supply May Slow; Scarcity Supports Compute Pricing
JPMorgan expects no major changes to 2027 capital plans, as most projects with spending slated for that year have already broken ground. The greater impact will emerge in 2028 and beyond.
From a financing market perspective, most 2027 projects have already secured financing. The market's next task is to determine when projects slated for 2028 and beyond can secure funding support. The report expects near-term bond supply may slow, with the first new deals more likely concentrated in data centers and GPU deployment projects in "safe" jurisdictions.
There is also a positive side to this slowdown. A flattening growth curve helps commercialization progress catch up with capital expenditure while keeping compute supply tight for longer. For investors, the data center industry is transitioning from a pure expansion cycle into a new phase priced on permitting, power, construction progress, and the degree of asset delivery.
