Less than a year ago, Texas Gov. Greg Abbott stood beside Google CEO Sundar Pichai to celebrate the company’s $40 billion investment in the state’s cloud and AI infrastructure. Three new data center campuses would help make Texas, Abbott declared, the “epicenter of AI development.” 

On Tuesday, Abbott lost his reelection bid to Gina Hinojosa, a Democrat who campaigned on halting new data center development until state lawmakers pass stronger protections for residents. At a press conference over the summer, Hinojosa accused corporations of taking advantage of Texans and operating with little oversight, blaming Abbott for creating the “Wild West of data centers.”

Her stunning victory makes her the first Democrat elected governor of Texas since Ann Richards in 1990. And given that Texas is home to the country’s second-largest data center market, behind Virginia, the political upheaval could have profound implications for the AI boom.

Texas’s $2.9 trillion economy is the nation’s second-largest; if it were a country, it would rank eighth worldwide. It also boasts abundant energy resources, a ton of relatively inexpensive land, and a historically light regulatory touch—all of which have enticed AI firms (and firms in seemingly every other sector, for that matter). Researchers at Rice University’s Baker Institute estimate that annual data center investment in Texas rose from $3.4 billion in 2022 to a projected $66.2 billion in 2026.

And much more is in the pipeline. Texas accounts for roughly 26% of planned American data center capacity—nearly three times the amount planned in Virginia—according to an analysis by investment bank Jefferies, as reported by The Wall Street Journal .

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