Morgan Stanley Breaks Down The Midterm Races It's Watching With Implications For Ai And The Data Center Boom

• Americans have been rising up against data centers in their communities.
• As the midterms approach, data centers have become a flashpoint US politics.
• Morgan Stanley said it's watching key congressional races with implications for data centers and the AI boom.

Wall Street is always on high alert in an election year, but there's a new issue that's motivating voters to get out to the polls this fall: data centers.

Big Tech firms are pouring enormous sums of money into data centers to power their AI ambitions, but the projects are coming up against local opposition that proving effective at stalling or even canceling some projects.

Morgan Stanley in a note last week said that it's watching some big races this November that could have consequences for the data center buildout.

"We've been flagging this as the key wedge issue into the 2026 election since it began to percolate last fall," said strategist Ariana Salvatore. "That being said, we still see this as a state and local policy risk rather than a federal one for the time being."

The investment bank recently highlighted opposition as a potential bottleneck for the AI trade, and a growing number of finance pros are coming to see the data center backlash as a growing risk to the AI trade.

President Donald Trump has even been drawn in, expressing support for data centers in posts on Truth Social. He framed them as a positive economic force that can benefit rural communities. However, as Business Insider's reporting has found, the massive structures can also impose extreme costs on struggling economies and drain key resources.

While Morgan Stanley says that there will likely be more risk for the AI trade following the 2028 presidential election, Salvatore added that her team is monitoring several midterm races closely, as their outcomes could impact planned data center projects. Here are the House and Senate races on their radar.

House:

• Pennsylvania's 8th District: Rob Bresnahan Jr. (R) vs. Paige Cognetti (D) — Bresnahan introduced a bill in June that would make it harder for tech companies to sue communities over zoning issues. What to watch: "Bresnahan's Local Control Protection Act would limit developers' ability to sue municipalities that push back, but it has no cosponsors and has not left committee. Congetti is running on the issue rather than on a mechanism."
• Michigan's 7th District: Tom Barrett (R) vs. William Lawrence (D) — Lawrence has expressed support for a data center moratorium, while Barrett has filed multiple bills aimed at guarding against data center overreach. What to watch: "Lawrence backs a federal moratorium, the vehicle being the Sanders-Ocasio-Cortez AI Data Center Moratorium Act. Barrett introduced the Protecting Local Control of Data Centers Act and the No Data Centers NDAs Act on 20 Aug. All three need federal legislation."
  
  Senate Races:
• Texas: Ken Paxton (R) vs. James Talarico (D) — Rep. Talarico has zeroed in on data center regulation as a key pillar of campaign strategy, including introducing a "Hold Data Centers Accountable Plan." Paxton has been slow to respond to data center related-matters but he recently rolled out a plan to address potentially negative impacts they may pose. What to watch: "Talarico's Hold Data Centers Accountable Plan would end the state sale tax break, set federal minimums and require closed-loop water, but Paxton also backs repealing the exemption, plus rural siting limits and a Chinese technology ban."
• Michigan: Mike Rogers (R) vs. Abdul El-Sayed (D) — Rogers has called for a moratorium on data center construction though he does not support an outright ban. His opponent has been openly critical of data centers, calling for strict regulations and zoning controls. What to watch: "Rogers came out for a one-year Michigan moratorium on 20 Aug while stating he does not support a federal ban. El-Sayed wants comprehensive zoning guidelines, local veto power and community-benefit deals. Neither could impose the Michigan pause."
• Ohio: Jon Husted (R) vs. Sherrod Brown (D) — According to Morgan Stanley, neither candidate has explicitly supported a data center pause, although Brown has described Husted as "the face of data centers" in Ohio. What to watch: "Husted calls siting a local issue. Brown targets tax breaks. Neither explicitly supports a pause."