Why investors should be concerned about the growing backlash to AI data centers
NEWS | 30 August 2026
You've probably seen the protests and spirited town halls full of concerned citizens opposing a new data center in their backyard. It's part of a growing grassroots trend that's mobilized people across the political spectrum. The noisy, water-hogging structures, they say, are a blight on their communities, and some projects have been canceled as a result of the opposition. Unlike other bottlenecks within the AI trade like power and memory compute, which have resulted in a kind of scarcity that's been bullish for assets linked to those industries, market experts say public hate for AI data centers is a risk investors need to be aware of. "Markets operate within rules set by voters and governments…and those rules are becoming more restrictive," Nohshad Shah, head of fixed income sales EMEA at Citadel Securities, wrote last week. "The next compute bottleneck may not be silicon, or even electricity…it may be permission." So far, the movement to oppose data centers has proven successful in many places. According to The Atlantic Council think tank, 75 data center projects across the US, worth roughly $130 billion, were delayed or cancelled when local communities stood together in protest in the first quarter of 2026. A Fayetteville, Georgia resident who helped block a data center construction project in his home town told Business Insider that the experience showed him how much power locals truly have to stymie new projects. Demonstrators wave signs during a nationwide protest against AI data center expansion in Imperial, California SANDY HUFFAKER / AFP via Getty Images Meanwhile, governors such as New York's Kathy Hochul and Pennsylvania's Josh Shapiro have cracked down on data centers. The trend prompted Morgan Stanley analysts to flag local opposition movements as a growing problem for the AI trade, a sentiment that more investors are coming to share. Andrejka Bernatova, founder and CEO of investment firm Dynamix Corporation, told Business Insider that while she still sees power as a major constraint for the data center movement, she also views local opposition as a problem that shouldn't be written off. "I think investors absolutely need to pay attention to it," she told Business Insider. "We are already seeing firsthand that the growth of AI and data centers is constrained by power. If you then add permitting, siting and local community opposition, obviously that makes getting these projects built even harder." Explore BI Games Take a smarter break in your day - and see how far you get. Play now Want more Business Insider in your news feed? Add BI in Google so our reporting is easier to find when you’re searching for what matters. Add to Preferred Sources Others say that it has already become a problem for the AI trade and that investors should position accordingly. Max Kulyk, CEO of wealth management firm Chicory Wealth, said that his team regards it as a significant risk that is likely to get worse. "A slowdown results in fewer orders for the physical inputs and semiconductors into datacenters, while also limiting the compute available for AI models," he said. "It could also delay revenue for some companies that took on large amounts of debt to finance their datacenter buildouts. This outcome hurts semiconductors, physical AI inputs, and hyperscalers alike." Brian Mulberry, chief market strategist at Zacks Investment Management, has a similar concern, noting that data opposition could slow the AI adoption rate at a time when a dearth of compute power is already pushing token prices up, making it hard for businesses to pay for their AI use. "I would say that land is the next concern in the data center build out with a fair amount of Not In My BackYard (NIMBY) that is showing up in local and mid-term politics that does make sense as a bottleneck," he added.
Author: Samuel O'Brient.
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