Factbox: Companies most exposed to potential US data-center curbs after blue sweep

Amazon.com

Thu 17:40

Adds more context
Nov 5 (Reuters) - Democratic victories in key data-center states such as Texas and Georgia have fueled expectations of tighter AI oversight, while investors also worry that a potential extension of Texas' data-center permit freeze could delay projects.
The states where Democrats could restrict data-center development account for roughly 45% of planned US capacity, with Texas accounting for about 25%, according to Goldman Sachs.
Here is a list of companies that could be impacted by a potential slowdown of the data-center buildout:

POTENTIAL LOSERS:

DATA-CENTER INFRASTRUCTURE COMPANIES
Data-center developers with most exposure to Texas include Cipher Digital CIFR.O, MARA Holdings MARA.O, SEI SEI.N and Galaxy Digital GLXY.O, according to Morgan Stanley.
Morgan Stanley sees exposure to Texas, where the Democratic winner campaigned in part on a moratorium on data-center development, as one of the primary risks for companies that are based in or have active projects in the state.

POWER GENERATORS AND EQUIPMENT COMPANIES
Power companies that supply to the rapidly expanding data-center operations could face an impact, especially those with substantial exposure in Texas, Ohio, Pennsylvania and Georgia.
Vistra VST.N, NRG Energy NRG.N, Constellation Energy CEG.O and Talen Energy TLN.O are among the power companies that J.P.Morgan expects could come under pressure from project delays.
"Most of these states have not placed an outright ban on data-center development, but any new projects are expected to have higher hurdles for approval, giving approved projects a significant advantage," analysts at J.P.Morgan said.
According to Morgan Stanley, gas engine manufacturer Innio INIO.O looks the most exposed to Texas and slower bookings.
Morgan Stanley expects underperformance across the power equipment group, but sees limited impact on GE Vernova GEV.N due to its diversified customer base and regional exposure.

CHIPMAKERS
Chipmakers are widely regarded as one of the biggest winners of the AI boom, so any slowdown in data-center development could be negative for the semiconductor space.
UBS analysts estimate that data-center pauses will slow the pace of buildout into 2028, with about 30% of expected 2028 additions now at risk of being impacted.
"The slowdown is a negative for semis and AI infrastructure, but a lot is already priced into semis with valuations nearing multi-year lows," they said.

CLOUD COMPANIES
Oracle ORCL.N and CoreWeave CRWV.O are among the companies that could be impacted by possible construction delays or moratoriums, according to Baird Equity Research.
"That said, we think recent underperformance of the neocloud group has priced in substantial, though clearly not all risk," Baird analysts said.

POTENTIAL BENEFICIARIES:

HYPERSCALERS
Hyperscalers such as Amazon AMZN.O, Microsoft MSFT.O and Alphabet GOOGL.O could prove resilient with their diversified exposure and greater resources.
For bigger companies, analysts have said a slowdown in new data-center construction could not only ease cash flow concerns, but also raise the value of capacity they already own or lease as new project approvals could become harder to secure.

UTILITIES
Data-center developers with less Texas exposure such as Applied Digital APLD.O and TeraWulf WULF.O could be more insulated than peers, Morgan Stanley analysts said.
They also expect investors to shift to more defensive utilities such as Ameren AEE.N, Consolidated Edison ED.N and Duke Energy DUK.N.

 (Reporting by Joel Jose, Kanchana Chakravarty, Medha Singh and Prathik Jayaprakash in Bengaluru; compiled by Sruthi Shankar; Editing by Shilpi Majumdar)
 ((Prathik.Jayaprakash@thomsonreuters.com; +91 9916364306))