Susquehanna sees 8% of AI data center projects at risk

Susquehanna Financial Group said Friday that approximately 12 gigawatts of artificial intelligence data center projects planned for 2028-2030 could face cancellation in a worst-case scenario following regulatory challenges after the 2026 midterm elections.

The firm’s analysis indicates that 60 gigawatts, representing about 40% of the 148 gigawatts of training-focused AI data center projects planned for 2025-2030, face potential delays due to pending regulatory approval. The 12 gigawatts at risk of cancellation would represent 8% of total planned projects and 20% of projects awaiting approval.

Susquehanna noted that near-term disruption appears limited since most 2027 projects have already received permits. The risk concentrates in the 2028-2030 period, with 2027 still expected to be the peak year for new installations.

The firm said enterprise-driven inferencing workloads, which are set to begin ramping in 2027 and are not included in the 148 gigawatts figure, could partially offset any shortfall. A recovery in non-AI semiconductor demand may also provide some compensation.

In the worst-case scenario, the semiconductor industry could see a 10% year-over-year revenue decline. The PHLX Semiconductor Sector Index currently trades near its historical forward price-to-earnings ratio trough of approximately 15 times and has fallen about 38% from its June peak.

Susquehanna concluded that while project-level risks have increased, the market may already reflect these concerns more than current sentiment suggests.