AI Growth Sparks Data Center Rush in Texas, Divides Leaders

Artificial intelligence is fueling a surge in data center development in Texas. This boom has led to disagreements between President Donald Trump and Texas Governor Greg Abbott, two prominent figures in the Republican Party. The projects promise billions in investments but require vast amounts of electricity, raising concerns about power grid implications.

Governor Abbott wants data centers to bear the cost of necessary infrastructure and has asked developers to generate their own power instead of burdening Texas residents. Trump’s stance differs; he sees Abbott’s approach as a mistake, focusing on the economic benefits these projects bring to hosting communities.

Trump stated, “Data centers could be bigger than oil,” underscoring the potential economic impact.

Abbott aims to make Texas a major site for data center growth, though this has heightened scrutiny on the energy grid’s capacity to handle new, large-scale facilities.

Dallas tops the Cushman & Wakefield’s 2026 Global Data Center Market Comparison, highlighting Texas’s rapid growth as companies move to tap its resources. The state might soon rival Virginia, currently the leading data center market globally.

Balaji Tammabattula, COO of BaRupOn, noted Trump’s criticism as beneficial. Companies have dedicated massive investments due to Texas’s business-friendly reputation. BaRupOn’s strategy includes creating a self-sustaining power system on their 700-acre Houston-area campus. This approach aligns with Texas’s push for data centers to generate their own power.

The state’s challenge lies in accommodating the industry without passing costs to residents. Tammabattula emphasized the urgency of resolving this tension as AI advancements drive demand for data centers. He believes the solution requires government intervention.

Amanda Macias reports on business, economics, and politics, focusing on how policy affects markets, businesses, and American workers.