The artificial intelligence boom is facing a growing human obstacle that investors may be underestimating. While Wall Street has focused on chip stocks and hyperscaler spending, a grassroots revolt against data centers is gaining momentum across the United States, threatening to disrupt the physical infrastructure underpinning the AI trade.
In the first quarter of 2026, 75 data center projects with a combined value of $130 billion were blocked or delayed by local opposition, according to Data Center Watch, a research firm backed by AI security company 10a Labs. That figure equals the total number of projects that faced such fates in all of 2025, signaling a rapid acceleration in resistance.
Why Communities Are Pushing Back
The grievances are diverse but center on several key issues. Power consumption is a primary concern: between 2018 and 2023, data centers' share of total U.S. electricity consumption rose from 1.9% to 4.4%, according to a study in Environmental Research Letters. Projections suggest national average wholesale electricity costs could rise 6% to 29% by decade's end, driven largely by data center expansion. In Virginia, a hotspot for data center development, electricity generation costs could spike by as much as 57%.
Water usage is another flashpoint. Data centers consume millions of gallons annually for cooling, straining drought-prone communities and aging infrastructure. Residents also cite the constant low-frequency hum from large facilities, which critics argue could alter neighborhood character and pose health risks with prolonged exposure.
Beyond these tangible issues, a broader psychological resistance to artificial intelligence is fueling the movement. According to a June Reuters/Ipsos poll, 44% of Americans oppose data center construction in the U.S., while only 21% support it. When asked about a data center in their own community, 57% said no, versus 14% yes. "Something that has changed right now is that now we have people that are against data centers even though they don't have a data center in their backyard, because they see data centers as the embodiment of AI," Miquel Vila, lead analyst at Data Center Watch, told Fortune. "What they oppose is AI. They consider that stopping data centers is the way to stop AI development."
Wall Street's Exposure
The financial stakes are significant. Morgan Stanley estimates hyperscalers like Microsoft, Amazon, and Alphabet will spend $800 billion on capital expenditures in 2026—roughly matching the combined capex of all non-technology S&P 500 companies in 2025. The Semiconductor Industry Association projects an additional $4 trillion in data center infrastructure spending through 2028. Data center construction spending has already topped $50 billion in a single month, exceeding total U.S. public spending on transportation infrastructure, as Bloomberg reported.
AI enthusiasm has driven the S&P 500's 84% rise since ChatGPT's public launch in November 2022. Goldman Sachs expects the AI investment theme to account for roughly half of all earnings growth over the next two years. However, the lofty valuations of AI supply chain companies rest on the assumption that planned capacity will materialize—and a large portion may not.
"A lot of the commitments and the build-out of data centers where it’s easy has kind of been done, so you’re getting marginally more difficult," said Todd Castagno, a managing director at Morgan Stanley, in a New York Times report. "From a markets perspective, expectations might be, maybe not reset, but realigned with the fact that it’s hard to put a couple trillion dollars in the ground in a short time."
Cities including Tulsa, New Orleans, Birmingham, and Ypsilanti Township in Michigan have implemented temporary bans on data center permitting or construction, as have dozens of other counties and towns, according to a database maintained by hedge fund Interconnected Capital. Democrats and Republicans in 14 states have proposed construction pauses. Maine's legislature passed a temporary statewide moratorium in April, though it was subsequently vetoed by Governor Janet Mills.
Industry Response May Fall Short
The tech industry has launched a public relations counteroffensive. Meta spent over $6 million on an advertising campaign across eight states and Washington D.C., promoting the economic benefits of data centers. OpenAI and Microsoft have pledged to absorb the energy costs their facilities generate, aiming to ease consumer anxiety about rising electricity bills. Nvidia, Amazon, and Google have each announced investments in renewable energy to power their data centers.
However, the ideological dimension of the opposition—rooted in distrust of AI itself—may prove resistant to economic arguments. For investors, the growing revolt introduces a new layer of risk to the AI trade, one that could delay or derail the massive capital deployment that markets are counting on. As the pace of resistance accelerates alongside construction, the collision between local communities and the AI industry is becoming a critical factor to watch.
This article is for informational purposes only and does not constitute financial advice.
