The Texas data center boom is putting President Donald Trump at odds with one of his closest allies, Gov. Greg Abbott, as artificial intelligence drives a rush of multibillion-dollar projects and fresh strain on the state’s power system. Trump said Abbott’s approach to data centers is a mistake, while Abbott is pressing regulators to make sure developers cover the infrastructure costs tied to their projects.
The fight centers on who pays when huge new facilities need more electricity. Abbott has directed state regulators to ensure data centers pay for the grid upgrades needed to serve them, and he has also urged developers to build their own power generation instead of passing costs to Texas residents. Trump, by contrast, said the projects can bring major economic upside and argued that turning them away would be short-sighted. In an interview with Punchbowl News published Friday, he said, “For Texas to say no to data centers is a mistake in the sense that it could be bigger than oil.” He added, “Data centers could be bigger than oil.”
Texas has become a major test case because the state sits at the center of the artificial intelligence and cloud computing buildout. The demand for computing power has fueled a wave of development across the state, and Dallas now ranks as the world’s No. 1 primary data center market, according to Cushman & Wakefield’s 2026 Global Data Center Market Comparison. The firm said Texas is growing quickly enough that it could eventually rival or even surpass Virginia, which is now the world’s largest data center market by operating capacity.
That growth has also sharpened concern about the Texas grid. Large data centers consume massive amounts of electricity, and state leaders are under pressure to prevent the cost of new transmission and related infrastructure from landing on ordinary ratepayers. Trump has made energy dominance and U.S. leadership in artificial intelligence central themes of his second term, which helps explain why the clash with Abbott is drawing attention well beyond Texas. Neither the White House nor Abbott’s office responded to Fox News Digital’s request for comment on the disagreement.
Some companies building in Texas say Abbott’s tougher stance could help their own plans. Balaji Tammabattula, chief operating officer of BaRupOn, said Trump’s criticism of the governor was “really helpful.” BaRupOn is developing a data center campus in Texas, and Tammabattula said the company has already committed significant money based partly on Texas’ business-friendly reputation. He said the governor’s shift could create problems for firms that believed the state would remain open to the industry.
