Georgia is the 'underappreciated risk' for data center backlash

The AI trade has kept its eyes on the data center-heavy state of Texas in the wake of the midterm election blue wave that saw data center critic Gina Hinojosa take over as governor from Republican Greg Abbott.

But investors would be wise to pay equal — or more — attention to Georgia to see how the political winds are blowing for data centers there.

"Georgia may be the underappreciated risk," Bernstein analyst Madison Rezaei said, adding that "Atlanta has become an extremely popular market with big investment from a range of credible developers, including both Digital Realty Trust ( DLR ) and Equinix ( EQIX )."

Rezaei noted that the Georgia Public Service Commission flipped to a 3-2 Democratic majority, giving Democrats control of the body that decides who pays for power and how quickly it arrives.

Major approvals, including approximately 10 gigawatts of certification and OpenAI's ( OPAI.PVT ) 3.2GW contract, are already complete, Rezaei noted. But Georgia Power's next capacity request and 2028 rate case remain outstanding.

"What the new majority can reach is the future: Georgia Power's next capacity request (for 2032-33, filed mid-2027) and the 2028 rate case," Rezaei said. "That makes it a pricing lever on 2030s load, not a stop sign on today's construction. The exposure is concentrated in a handful of campuses: OpenAI's Camellia (3.2 GW nameplate), DLR's Project Bunkhouse (2.0 GW), QTS in Blakely (1.4 GW) and Google's White Oak and Rumble sites (2.7 GW combined). Most of it is back-end loaded, with 87% of Georgia's pre-construction credible capacity dated 2029 or later. The equipment sales-tax exemption runs through 2031, and repealing it still needs a Republican Senate. Bottom line: Georgia didn't really get riskier this year, but it did get more expensive later."

The markets are on edge over fears that a slowdown in data center build-outs will upset the profit boom of the world's biggest companies — all of which are in tech.

The S&P 500 ( ^GSPC ) lost 4.4% of its market value on Thursday , wiping out $3 trillion in the process.

The Dow Jones Industrial Average ( ^DJI ) plunged 1,280 points in its worst single-day rout since 2020. The tech-heavy Nasdaq ( ^IXIC ) cratered 4.8%, dragged down by semiconductor and cloud giants such as Micron ( MU ) and Sandisk ( SNDK ).

Hinojosa just dropped a sign of what's to come for data centers.

"We have always been a pro-business state in Texas, but what changes now with me as governor is it has to be a partnership that benefits Texans," Hinojosa said in a CNN interview late Thursday. "And right now what has happened is data centers have moved into mostly rural communities, and there are no rules and laws to protect Texans, and Texans are being taken advantage of. So the difference is we will have laws to protect Texans, and we need to stop what we are doing with data centers until we have those protections. It is not that I hate data centers. I hate the way they are taking advantage of Texas, and that stops when I'm governor."

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