Political resistance to data center development is becoming an increasingly bipartisan issue in the US, potentially strengthening the case for SpaceX’s (NASDAQ:SPCX) proposed orbital computing strategy, according to Evercore ISI.
Analyst Kutgun Mural highlighted signs of growing regulatory scrutiny at the state and local level. Texas has reportedly paused as many as 1,800 projects while audits are carried out, while Pennsylvania is withholding permits until developers have obtained all required local approvals.
Public sentiment also appears to be shifting. Polling cited by the firm indicates that 75% of Americans would oppose having a data center built near them, compared with 42% a year ago.
Political debate creates headline risk for AI sector
With the US midterm elections approaching, Evercore characterised the situation primarily as a headline risk rather than one likely to immediately alter financial estimates.
“We expect both parties to be loud on the topic into November 3 and would not be surprised if the entire AI complex takes negative headlines along the way,” Mural wrote.
For its terrestrial operations, Evercore said SpaceX compares relatively well with some of the requirements states are beginning to introduce. The company generates power behind the meter and has committed to financing grid upgrades required by its facilities, reducing the potential for those costs to fall on households.
However, Evercore stressed that this represents a relative advantage rather than complete insulation from political or regulatory challenges. Issues in Southaven demonstrate that SpaceX can still encounter opposition involving permitting, emissions and environmental-justice concerns.
Orbital computing could offer a different route
Evercore believes growing resistance to conventional data centers could make orbital computing more strategically relevant if SpaceX can successfully commercialise the concept.
“If SPCX can make orbital compute a reality it could have a significant advantage in both cost and speed to market and avoid the political pressure around terrestrial compute altogether,” the firm wrote.
Evercore estimates that a successful orbital computing strategy could eliminate the need for additional terrestrial capacity beyond 2029.
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