Texas Could Host 41% of New U.S. Data Center Capacity in 2028, and Its Next Governor Wants a Pause

Texas governor-elect Gina Hinojosa plans to extend the pause on new data-center approvals and freeze electricity rates, creating near-term headwinds for companies exposed to the state’s AI infrastructure buildout. Texas was projected by SemiAnalysis to host 41% of new U.S. data-center capacity by 2028; the article identifies IREN, Core Scientific, Cipher Digital, Digital Realty, Vistra, GE Vernova and Vertiv as potentially affected. Digital Realty has about 10% of its data centers in Texas, while the article says the sector’s longer-term growth prospects remain intact.

Analysis

The key risk is not an immediate loss of revenue from Texas assets; it is a slower, more expensive path to incremental capacity. A prolonged approvals pause could push projects into other markets, raise interconnection and construction costs, and defer the revenue needed to support highly leveraged neocloud expansion. That makes IREN, CORZ and CIFR more exposed to financing and dilution risk than established landlords. But the article supplies no project-level pipeline, approval status or Texas revenue mix, so the size of that exposure needs verification.

For DLR, a constraint on future campus growth matters more to the expansion narrative than to current rent. EQIX may be a relative beneficiary of a shift in development, although its different footprint and business mix make this an imperfect hedge. The electricity-rate claim is less direct: a retail-rate freeze does not automatically cap wholesale generator prices or unwind existing PPAs. VST’s exposure depends on the order’s scope, treatment of contracts and any knock-on effect on future data-center load. GEV and VRT could face delayed Texas orders, but a state-specific slowdown need not erase broader infrastructure demand.

Near term, policy language and implementation matter more than campaign intent. Over 1–3 months, watch permitting, grid-connection rules, contract treatment and company disclosures on Texas project schedules. Over 6–18 months, sustained delays could redirect investment to competing regions and weaken the relative growth case for Texas-exposed operators. The contrarian point: the article treats prospective restrictions as realized damage and conflates rate freezes with generator economics. No broad sector short is justified without confirmation.

Key Decisions for Investors

• Keep IREN, CORZ and CIFR on a high-risk watchlist rather than adding on a headline-driven dip. Before changing exposure, verify each company’s Texas project pipeline, permit/interconnection status, committed capital and liquidity runway; a material schedule delay or financing update would be the catalyst.
• Consider a small, risk-defined DLR-underweight/EQIX-overweight relative-value position only if the state confirms a sustained approvals freeze and company disclosures show a meaningful divergence in affected development pipelines. Reassess if DLR demonstrates permits or campuses are largely unaffected; the pair also carries valuation and business-mix basis risk.
• Do not short VST solely on the proposed rate freeze. First establish whether the order reaches wholesale generation revenues or existing PPAs, and monitor forward power prices and contract disclosures. A freeze limited to retail rates would materially weaken the bearish thesis.
• Treat GEV and VRT as watch items, not Texas-specific shorts: look for order cancellations or reduced guidance, rather than inferring broad demand weakness from delayed projects in one state.