Texas is Emerging as a Dominant Data Center Hub in the US

For years, Northern Virginia has been known as the capital of data centers in the U.S. However, this is likely to change soon as the leading tech companies in the country start expanding into other states like Tennessee, Ohio, Wisconsin and Texas. Texas is proving to be an extremely attractive data center location for several reasons.

Texas is a large state that has huge chunks of land which don’t currently have massive structural developments on them. This sprawling state has therefore become a magnet for Big Tech and the dozens of planned data center projects are testament to this allure of the abundant cheap land.

Additionally, Texas has what many states lack; sources of energy that the power-hungry data centers require as their lifeblood. The Lone Star State has the potential to generate lots of renewable energy like solar and wind energy, and many data center projects hope to leverage these resources as concerns grow about the energy cost of the ongoing AI boom in the country.

As a result of these unique advantages, 6.5 GW of data center projects are currently being constructed in the state. To put this power capacity into context, several countries like Italy or the UK consume that amount of electricity each year.

Among the data center projects under construction in Texas are a Meta site in El Paso, the Stargate facility jointly owned by OpenAI and Oracle in Abilene and a $40 billion expansion project by Google in West Texas, among so many others. Many of these projects plan to have onsite power generation to ensure that the required power to run the data centers is available round the clock.

It is also worth noting that tax incentives play a big role in the decision of Big Tech to choose one location over others. States are competing to offer companies attractive incentives to lure them to their jurisdictions, and the emerging hubs stand out in terms of the incentives they offer tech companies wishing to construct data centers or other facilities.

As the buildout of data centers accelerates to a feverish pitch, many firms like Broadcom Inc. (NASDAQ: AVGO) stand to see their revenues rise since these data centers need a growing array of software solutions. Texas stands out as an increasingly attractive location for these facilities, and policymakers hope that their residents will reap many of the attendant opportunities like jobs and deals to supply many of the requirements needed for the construction and operation of the data centers.

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