Community opposition is emerging as a major constraint on the U.S. data-center expansion, Morgan Stanley warned in an Aug. 17 research report. The investment bank said developers can no longer rely on capital, cheap land, electricity and tax incentives to secure projects, arguing that political backlash must be underwritten like land, power or labor. The issue is especially consequential in the 2026 election year, as the United States and China compete for leadership in AI, which depends on data centers to train, run and deploy models at scale. Morgan Stanley’s companion report described compute capacity, energy, data and supply chains as strategic national-security assets under an “AI sovereignty” imperative. The bank expects Washington to keep supporting development through permitting reform, energy policy and industrial incentives rather than impose a nationwide moratorium, but said local decisions remain a constraint beyond federal reach. Moody’s Ratings forecasts that Microsoft, Amazon, Alphabet, Meta, Oracle and CoreWeave will spend roughly $785 billion on capital expenditures this year and approach $1 trillion in 2027, while their combined data-center lease commitments exceed $1.2 trillion. Morgan Stanley projects a 38-gigawatt U.S. data-center power shortfall between 2026 and 2028 before new time-to-power solutions, with some regions facing grid-interconnection waits of five to seven years. Texas and Virginia have already moved to increase scrutiny and shift infrastructure costs toward projects that cause them. The bank said opposition rises disproportionately with project size, potentially favoring smaller colocation operators such as Equinix and Digital Realty over gigawatt-scale AI campuses. It warned that early signs of trouble may surface in municipal agendas, zoning hearings or local Facebook groups before regulators or courts become involved.