Chamath Palihapitiya says data center backlash is a 'powder keg' that AI leaders must defuse

Venture capitalist Chamath Palihapitiya sees worrying signs for data centers after recent actions in Texas and Pennsylvania.

ETIENNE LAURENT/AFP via Getty Images Venture capitalist Chamath Palihapitiya said the AI industry failed to sell itself.

Now, he said, data centers have become "THE symbolic representation" in the debate.

Palihapitiya said it's likely that the backlash will only intensify.

Venture capitalist Chamath Palihapitiya sees AI sitting on "a powder keg." And no, he's not referring to a bubble, but rather the growing backlash around data centers.

Palihapitiya, co-host of the "All-In Podcast," tore into "the collective leadership of frontier AI," who he said have failed to convince the American people of the benefits of their industry more broadly and the advantages of data centers, in particular.

"Data centers have unfortunately become THE symbolic representation of the asymmetric upside for a very narrow tech elite and a class that are untrustworthy," Palihapitiya wrote in a Thursday post on X.

The AI industry would be significantly hindered if companies are unable to build data centers , the sprawling facilities housing the advanced chips that train and run AI models.

Texas, Pennsylvania and now Ohio.

This is a powder keg and has the potential to unwind 200-300 basis points of annual GDP if it metastasizes.

How did it get this bad? The collective leadership of frontier AI has failed miserably in doing the basics: 1.

Paint a positive… https://t.co/6Uu1IlAtSS — Chamath Palihapitiya (@chamath) August 20, 2026 "This is a powder keg and has the potential to unwind 200-300 basis points of annual GDP if it metastasizes," Palihapitiya wrote.

The backlash isn't likely to get better, Palihapitiya said.

"Inasmuch, the safer bet may be that the pushback and resistance grows…," he wrote.