Signs of trouble in the data center industry
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The gist
47 large data center projects have fallen through this year, and Australia's NextDC stock fell 40%.
The AI buildout's financing, permits and local opposition are now the bottlenecks.
Background
Data centers are the physical backbone of the AI boom: since ChatGPT launched in 2022, a torrent of money has gone into building them. Now several pressures are converging — high interest rates and shaky bond markets, community opposition that has made projects politically toxic, and warnings about power grids and air quality. The Financial Times, drawing on RegLayer data, reports 47 large projects have already fallen through this year, while Bernstein analysts believe only about 35 percent of planned facilities are feasible.
How it unfolded
- Jan 2025The day after Trump's second inauguration, AI figures including OpenAI CEO Sam Altman and Softbank founder Masayoshi Son announced a $500 billion private investment in data centers at the Oval Office.
- 2026 -10Amazon rolled out its 'Amazon Data Center Commitment,' pledging to improve the environmental rating of its backup diesel generators and disclose more about energy and water use.
- Oct 16, 2026Reuters reported a record $3.3 billion USDA loan to a power plant in Georgia's Monroe County that could potentially benefit data centers in the state.
- Oct 19, 2026NHPR reported on the data center backlash and anxiety about AI.
- Oct 21, 2026Australian data-center operator NextDC slashed its earnings outlook and its stock saw a 40% selloff; separately, a Houston Advanced Research Center study warned Texas data center growth could reverse decades of air quality gains.
- Oct 22, 2026The FT, drawing on RegLayer data, reported 47 large data center projects have fallen through this year, with Bernstein analysts seeing only about 35 percent of planned facilities as feasible; the LA Times reported data centers have become politically toxic, with community opposition blocking municipal permits.
Who’s saying what
- Analysts
- Bernstein analysts believe only about 35 percent of planned facilities are feasible, and an unnamed executive told the FT it is 'much harder today to finance a data center.'
- Expert
- Carlos Gamarra of the Houston Advanced Research Center said air pollutant emissions will rise because of the data center industry and it must be developed sustainably.
- Public
- Jesse Rhodes of UMass Amherst said majorities of Democrats and Republicans, and of Harris and Trump voters, opposed data centers in their communities; resident Kelly Potanza called them 'surveillance centers.'
- Official
- USDA Under Secretary Glen Smith said rural areas can benefit from data centers 'but you have to have the infrastructure in place,' noting almost $8.6 billion in requests one month into the fiscal year.
- Support
- Google and Meta officials told the Associated Press they are trying to address mistrust by being more transparent with communities where they want to build.
Still unverified
The FT reports that top labs like Anthropic and OpenAI pushed so hard for developments that they swallowed outsized costs and deemphasized due diligence; it also raises the open question of what happens to data center projects if the AI industry's finances falter, a scenario many economists have warned is possible.