Vistra Down 32% as Texas Data Center Approvals Stall

By Sophie Lindqvist

What does a Texas approval freeze change?

Texas accounts for about 25% of planned U.S. data center capacity, according to Reuters, giving it the nation's largest development pipeline by some industry measures. Virginia still hosts the largest market of operating data centers, and rankings shift with the projects counted.

The report identifies governor-elect Gina Hinojosa as the victor over incumbent Greg Abbott on November 3. She has proposed holding new data center approvals until lawmakers establish protections for electricity consumers, water resources and surrounding communities.

Abbott already directed state agencies to pause certain environmental permits and grid connections while officials studied the industry's electricity and water requirements across the state. Hinojosa wants that review to last until new protections exist, potentially carrying uncertainty into 2027.

The distinction matters. An administrative pause can end, while a legislative standoff can reset construction schedules and financing terms. The report supplies no project list, election certification or dollar estimate, so the scale of any delay remains unmeasured.

How do Vertiv and Vistra earn from AI?

Vertiv manufactures the infrastructure inside data centers: uninterruptible power supply systems, electrical power distribution equipment, liquid cooling systems, chillers and thermal management gear. It generates none of the electricity that powers those servers.

Vistra operates natural gas, nuclear, coal and solar generation plants alongside electricity retail businesses. Its AI upside comes from selling power to new facilities in its markets, while Vertiv can sell equipment almost anywhere.

That difference sets the risk. If a project moves to another state or overseas, Vertiv may retain the equipment sale, whereas Vistra loses the load unless the destination sits inside a market it serves.

Does Vertiv's order book support its valuation?

Vertiv reported third-quarter revenue of $4.31 billion on October 28, up 61% from a year earlier, including 55% organic growth. Organic orders more than doubled, and adjusted operating margin reached 25.2%.

Growth was geographically broad. Americas revenue rose 75%, Asia Pacific 50%, and Europe, the Middle East and Africa 23%, according to company figures cited in the report. That spread leaves room for projects to shift away from Texas without disappearing from the order book.

Management raised 2026 revenue guidance to a $14.65 billion midpoint, with adjusted earnings per share near $7.15 and adjusted free cash flow of $2.6 billion to $2.8 billion. These are company forecasts, not booked revenue.

Relocation does not come free. New electrical designs, revised cooling, alternative utility connections and fresh construction contracts can postpone orders and revenue recognition, and some planned sites may be canceled outright.

Is Vistra's 32% decline already pricing the risk?

Vistra reported ongoing operations adjusted EBITDA of $2.38 billion for the third quarter of 2026, up 50.4% from $1.58 billion, and raised 2026 guidance to $7.1 billion–$7.5 billion. Its new 2027 range of $7.7 billion–$8.5 billion implies roughly 11% growth at the midpoint.

Texas supplied $1.23 billion of adjusted EBITDA, against $784 million a year earlier, accounting for about 52% of the quarterly total. That concentration explains the investor reaction to state approval news, and it also explains why existing assets cushion the downside.

Existing plants keep generating regardless of permit timing, and higher realized electricity and capacity prices contributed to the latest growth. In October, Vistra completed the acquisition of approximately 5,500 megawatts of natural gas generating capacity from Cogentrix Energy, authorized another $1.5 billion of share repurchases, and guided 2027 adjusted free cash flow before growth to $4.3 billion–$5.1 billion.

On November 6, management said it "had not observed a shift in large-customer electricity demand from Texas to the PJM electricity market" and remained in talks with customers in both markets. That is a management statement, not an independent pipeline count.

Share performance, YCharts comparison dated November 7:

• Vertiv: -0.09% over one year; +360.0% over three years.
• Vistra: -32.40% over one year; +253.2% over three years.
• Vertiv outperformance: 32.31 percentage points over one year; 106.8 points over three years.

The gap predates the November election, so Texas cannot explain all of it. Investors appear to be discounting the durability of electricity demand alongside the policy risk. The report also stops short of naming a better buy, judging that valuation depends on earnings, cash flow and the eventual regulatory outcome rather than growth rates alone.

Could training and inference move to Asia?

Training can run far from users, because the demanding latency sits between processors inside one cluster. Inference for interactive and real-time services often needs computing closer to customers, and data-sovereignty rules can limit where information is processed. So Asian construction would not replace U.S. investment dollar for dollar.

Vertiv could supply power distribution and cooling to facilities in Asia, Europe or other U.S. states. Vistra benefits only if relocated load lands in a market it serves, and relocation remains a possibility rather than an established trend.

What should investors watch next?

Permitting decisions, revised construction schedules, changes in electricity supply agreements and evidence of redirected capital spending will carry more weight than political statements.

Cost is the mechanism that can push projects elsewhere. New protections could require developers to finance extra transmission, secure independent power supplies or adopt more expensive cooling and water-conservation systems. Projects facing heavy grid upgrades may find relocation cheaper, while others absorb the added cost.

Texas policymakers face the same trade-off. Data centers bring construction jobs, tax revenue and private investment, but their electricity and water demands fall on nearby communities, so the final rules will decide which projects proceed.

If the approval pause stretches into 2027, Vertiv's order conversion and Vistra's future power sales will run on different clocks, and the first evidence should appear in permit rulings, delivery schedules and contract revisions rather than in election commentary.