The US stock power sector faces a reshuffle! Midterm elections increase the risk of data center delays; Morgan Stanley lists the damaged parties and relative winners.

According to news from Zhitong Finance APP, Morgan Stanley pointed out in its latest industry report that the results of the U.S. midterm elections may exacerbate policy uncertainty for data center development and further worsen the power shortage faced by data center developers in the United States. Election results show that there is a growing trend of resistance to data center development across many parts of the U.S., which brings the risk of compute power shortages. The report collectively refers to the affected stocks as "Electrification Time" stocks—namely, Powered Shell Providers and companies related to behind-the-meter power generation.

Texas: The Most Important Election Result

From the perspective of data center development, the most important election result is the Texas governor's race. Democratic candidate Gina Hinojosa’s victory, according to Morgan Stanley, will bring greater policy uncertainty and constraints on future power supply, thereby increasing the relative value and pricing power of the stock of existing electrified facilities.

The background is the severity of Texas' grid interconnection backlog: In August of this year, after Governor Greg Abbott ordered an audit of all data center projects in the ERCOT queue, Texas suspended part of the data center grid interconnection process. At the time, interconnection requests had reached about 474 GW, more than five times ERCOT’s record peak electricity demand, with data centers accounting for about 90% of the new power applications. Abbott warned that development on this scale could threaten grid reliability and stability, so ERCOT, for the first time, delayed the transmission planning study for Batch Zero of new large-load grid interconnection projects in Texas. One objective of the audit is to distinguish reliable projects from speculative applications that could inflate Texas power demand outlooks.

Morgan Stanley outlined the actions that the Texas Governor can take: First, issue an executive order to suspend new projects (if the Republican-led state legislature quickly passes guidance rules, the suspension period may be only a few months); second, appoint members to the power regulatory agency PUCT (six-year term, one seat expiring in 2027); third, instruct state agencies to slow down approvals for permits not yet issued. Governor-elect Hinojosa has already advocated suspending approval of new permits until legislation is passed (not applicable to projects under construction). More lasting reforms—such as canceling sales tax exemptions, authorizing local governments to veto projects, codifying electricity ratepayer protections, and requiring union hiring—would require support from the state legislature.

Ohio: 10GW NVIDIA Project Under Pressure

With Democratic candidate Amy Acton winning the Ohio governor’s election, Morgan Stanley believes this will significantly increase the risk of delays for data center projects in the state. The state’s highest risk project is a 10GW facility involving NVIDIA (NVDA.US) and a major U.S. AI lab; another major project under construction is Amazon’s (AMZN.US) 1.5GW facility in Fayette County. As of May this year, Ohio had already halted reviews of new data center tax exemption applications, with the state legislature studying data center expansion issues—tax exemptions are a key consideration for data center site selection.

Morgan Stanley emphasized that the resistance trend toward data centers reinforces its concerns about insufficient U.S. data center capacity by 2028.

List of Impacted Stocks and Valuation Reassessment

Morgan Stanley listed the stocks with the largest exposure to Texas data centers and behind-the-meter power generation (U.S. ticker symbols): CIFR, MARA, GLXY, SEI, VST, CEG, AEP, SRE, CNP, and NRG, alongside power equipment stocks. Relative "Electrification Time" winners: WMB, EQIX, DLR, WULF, APLD, TLN, BE, as well as Louisiana's HUT.

On individual stock valuation, analysts revisited assumptions using the probability-weighted method. Cipher Mining (CIFR): the combined value of existing leases and bitcoin assets is $18/share; adding a 56% weighted probability for additional site data center leasing yields a target price of $51.50/share; the bear case, assuming no incremental projects, is only $5/share. Galaxy Digital (GLXY.US): Helios II (830 MW) is projected with a 95% chance to generate revenue by mid-2028, while signed Helios I Phase II (about 400 MW) and Phase III (about 200 MW) with CRWV have 100% probability of timely electrification, for a sum-of-the-parts valuation of $43. RIOT’s grid interconnection value at its Corsicana and Rockdale sites could rise, but proposed data center projects are at risk of falling under policy uncertainty.

For Independent Power Producers (IPP), the report expects the sector to underperform sharply, led by VST, with NRG and CEG following; TLN and PEG, with no Texas exposure, are relatively defensive. Not counting data center upside, the calculated asset values are: VST about $180/share, NRG about $129, TLN about $430, CEG about $249. ERCOT forward power prices are expected to decline only modestly. TLN and CEG, with larger PJM exposure, are expected to outperform; investors can watch for progress on nuclear contracts (CEG, VST) and TLN’s data center signings.

The equipment and on-site generation segments are expected to be pressured overall, due to risks of a slowdown in the data center industry rather than Texas exposure alone, with engine supplier INIO likely the most sensitive; GEV has the most diverse customer and regional structure, with limited earnings forecast impact but valuation multiples facing downward pressure. Bloom Energy (BE.US) is mentioned as a beneficiary: if Democrats ramp up opposition to the environmental and noise impacts of gas turbines, its sulfur oxide and nitrogen oxide-free, waterless, noiseless fuel cells would be relatively more attractive in certain states. Solaris is supported by four long-term contracts with major hyperscale cloud and data center operators, giving it a valuation support of $81/share (current price $69).

Among utilities, CenterPoint (CNP.US) is the most sensitive to downside: it has the highest Texas exposure, about 11% valuation premium, and crowded positions; SRE, AEP, XEL and ETR also have Texas exposure. The report expects funds to rotate to defensive utilities such as AEE, ED, DUK, and to stay with ETR.

In custody and digital asset infrastructure: EQIX operates nine facilities in Texas (about 3% of its 280 global data centers); DLR’s Dallas Metro portfolio accounts for 4.2% of its 3Q26 annualized rent, and its 80MW, $300M Digital Garland project remains affected by the ERCOT verification process, but a slower or tougher approval environment will enhance the scarcity value of its already-electrified stable assets. WULF is immune to Texas regulatory uncertainty (its next project will likely be in Kentucky); APLD has no Texas exposure and focuses on politically friendly states, also making it a relative beneficiary. The report maintains the highest conviction on WMB: as a behind-the-meter gas supply solution relying on the natural gas grid, after signing, it can supply gas and power to hyperscale cloud providers within 18 to 24 months. The current share price significantly undervalues the behind-the-meter data center power growth that will become increasingly evident in the next 12 to 24 months.