
Data centers have clustered in distinct geographic patterns across the United States, with Virginia leading the nation through more than 300 facilities concentrated in Northern Virginia’s “Data Center Alley.” California follows with over 200 facilities centered in Silicon Valley, while Texas ranks third with more than 150 data centers, primarily in the Dallas/Fort Worth area. Illinois anchors the Midwest with over 100 facilities, and Arizona has emerged as a Southwest hub with significant capacity in Maricopa County.
These concentrations reflect specific infrastructure advantages—Virginia’s fiber connectivity and federal proximity, Texas’s independent power grid, California’s technology ecosystem, and Arizona’s cooling-friendly climate—that have made certain regions optimal for housing the computational infrastructure driving America’s digital economy. Hassan Taher, founder of Taher AI Solutions and a longtime observer of AI infrastructure trends, has been tracking this transformation across the United States and provides further insight on the states with the most AI data centers.
Virginia’s Dominance Through Fiber and Federal Proximity
Northern Virginia has emerged as the undisputed leader in data center concentration, with Loudoun County alone hosting more than 275 facilities. The region supports nearly 6,000 MW of operating and under-construction capacity, with another 6,300 MW in planning stages—representing almost half of all primary market data center inventory nationwide.
Hassan Taher points to Virginia’s unique combination of advantages that created this dominance. “The convergence of federal government proximity, subsea cable landings, and aggressive tax incentives created a self-reinforcing cycle,” he explains. The state’s exemption from retail sales tax on qualifying equipment, combined with a stable 6% corporate income tax rate maintained since 1972, has attracted hyperscale operators seeking predictable costs.
The presence of four subsea fiber cables terminating in Virginia provides direct connectivity to global markets, while the skilled workforce drawn from military and government-funded research institutions offers the technical expertise these facilities require. Dominion Energy’s reliable power grid has proven capable of supporting the massive electrical loads that modern AI training requires.
California Maintains Technology Leadership
Despite higher costs and regulatory challenges, California retains over 200 data centers, concentrated primarily in Silicon Valley. Santa Clara County supports 1,314.73 MW of operating and in-construction capacity, serving the dense ecosystem of technology companies requiring low-latency connections.
California’s position as a Pacific gateway, with multiple undersea cables providing direct connectivity to Asia, ensures continued relevance for companies serving global markets. The state’s concentration of AI research institutions and venture capital funding creates demand for nearby computational resources that cannot easily be replicated elsewhere.
Texas Leverages Independent Power Markets
Texas ranks third nationally with over 150 data centers, but its growth trajectory may be the most significant. The Dallas/Fort Worth metropolitan area experienced a 173.1% increase in inventory during the second half of 2023 alone. Commercial electricity demand across Texas added 13 billion kilowatt-hours between 2019 and 2023, largely driven by computing facilities.
The state’s independent power grid, operated by ERCOT, provides a competitive advantage that Hassan Taher considers crucial for AI infrastructure development. “The deregulated electricity market allows operators to negotiate directly with power providers, creating cost structures that traditional regulated markets cannot match,” he notes. This flexibility has attracted major AI infrastructure projects, including sites for the Stargate project in Shackelford County and Milam County.
Texas House Bills 1223 and 2482 provide temporary sales tax exemptions for qualifying data centers, while the abundance of renewable energy projects in West Texas offers both cost savings and sustainability credentials that major technology companies increasingly require.
Arizona Emerges as Southwest Hub
Maricopa County has become one of the top counties nationally for data center capacity, with 3,436.1 MW operating and under construction, plus 5,966 MW in planning phases. Phoenix’s rapid growth stems from its dry climate, which reduces cooling energy requirements—though this advantage comes with increased water consumption challenges.
The region’s plentiful real estate and lower operating costs have attracted hyperscale operators seeking alternatives to California’s higher costs and regulatory complexity. Hassan Taher observes that Arizona’s growth reflects the relationship between AI development and business advancement: “Companies are discovering that operational efficiency often outweighs proximity to traditional technology centers.”
Midwest and Regional Players
Illinois anchors the Midwest with over 100 facilities, while Cook County supports 1,478.13 MW of capacity with more than 2,000 MW planned. Chicago’s position as a fiber hub connecting East and West Coast networks makes it essential for companies requiring nationwide reach.
Ohio has attracted attention with Franklin County supporting 1,257.4 MW of capacity and a new Stargate AI facility announced for Lordstown. The state’s strategic location between major markets, combined with substantial tax incentives and job training programs, has positioned it as an attractive alternative to higher-cost regions.
Oregon leverages hydroelectric power from the Columbia River system, with Morrow County and Umatilla County each supporting over 1,100 MW of capacity. The region’s cool climate reduces cooling costs, while abundant renewable energy aligns with corporate sustainability commitments.
Infrastructure Realities Shape Future Growth
Hassan Taher emphasizes that current expansion patterns reflect fundamental infrastructure constraints rather than traditional business location factors. “Power availability has become the primary site selection criterion,” he explains. “Companies are choosing locations based on grid capacity and interconnection timelines rather than proximity to customers or workforce.”
This shift has profound implications for regional economic development. States that can rapidly expand power generation and transmission infrastructure will capture disproportionate shares of AI-driven investment, while those with constrained grids may find themselves excluded from the next phase of technological growth.
The data center boom represents more than infrastructure expansion—it reflects the geographic reallocation of America’s digital economy toward regions capable of supporting AI’s enormous computational demands. As Hassan Taher’s analysis reveals, success in this transformation requires more than favorable business climates; it demands the fundamental infrastructure capacity to power artificial intelligence at scale.