Opposition to data centers is mounting across the United States, with communities rejecting new projects and politicians facing growing pressure to restrict their construction. Thousands of miles away, however, South America's largest country is positioning itself as an unlikely beneficiary: Brazil is already one of the world's leading AI markets and is actively clearing the way for more buildout.

Brazil ranks among the biggest adopters of artificial intelligence tools. Brazilians send 215 million messages to ChatGPT every day, according to OpenAI, making the country the chatbot maker's third-largest market for weekly users, behind only the U.S. and India.

Major technology companies are deepening their commitments. Google said it plans to double its cloud infrastructure in Brazil by 2030 to meet growing demand, and in March it signed a sponsorship deal with the Brazilian Football Confederation to integrate Gemini across the country's men's, women's, and youth national teams.

Other hyperscalers are investing as well. Amazon Web Services has poured more than $3.8 billion into data center infrastructure in Brazil since 2011 and has pledged an additional $1.8 billion through 2034, while Microsoft has committed $2.7 billion to cloud and AI infrastructure over three years.

So far, local demand — rather than American companies relocating operations abroad — has powered much of Latin America's data center growth. Carlos Barrera, CEO of Atlas Renewable Energy, believes that pattern may be about to shift.

"We do see the region as actually an attractive release valve for some of the U.S. capacity constraints that you see now," he said.

With a population of nearly 214 million people spread across a territory larger than the contiguous 48 U.S. states, Brazil is a logical target for hyperscalers. Its electricity supply is another major draw: power costs less than half what it does in the U.S. According to a report from the country's Ministry of Mines and Energy, Brazil generates nearly 87% of its electricity from renewable sources, and rapid growth in wind and solar capacity has produced a surplus. Power access has become central to where data centers get built as AI workloads scale, which is why that surplus stands out.

"U.S. backlash isn't pushing hyperscalers out of the country so much as pushing them toward wherever power shows up first," James Mercer, a principal at data center advisory firm Metro Colo Advisory, told Fortune.

Brazil's cheap electricity, however, may not stay cheap. Barrera noted that the country will need more transmission lines to connect large data centers to the grid, and government officials remain divided on whether electric bills will rise as a result. How Brazil expands its transmission network — and who absorbs the cost — is likely to shape the economics of the next wave of projects.

The tax code has been another brake on Brazil's AI ambitions. High federal import taxes have made building large data centers more expensive there than in other countries in the region.

To address that, President Luiz Inácio Lula da Silva signed a law on Sept. 15 cutting taxes on qualifying data center equipment — a stark contrast to the approach of some U.S. lawmakers, who have proposed taxing data centers' electricity use and output.

"If Brazil wanted to be a player in the data center space, it had to do this tax law change," Christopher Torto, CEO of Ascenty, Latin America's largest data center and connectivity service provider, told Fortune.

Data sovereignty

Lula's government hopes the tax break will draw more computing capacity into the country, enabling Brazilian businesses to develop AI products and depend less on foreign services. At present, 60% of Brazilian digital data is processed abroad, according to the country's Ministry of Development.

The legislation, known as REDATA, comes with strings attached: companies must offer at least 10% of their qualifying computing services to Brazilian customers and invest 2% of the value of the tax-benefitted equipment in Brazilian research and development. How many operators take up the incentives — and whether they meet those conditions — will be the first signals of whether the law converts Brazil's cost advantages into operating capacity.

"It's to improve the data sovereignty of Brazil, so we won't rely so much on foreign services, especially in a time with Trump," Ana Carolina de Assis Nunes, a Brazilian anthropologist and data center researcher at the nonprofit policy institute Data & Society, told Fortune.

Nunes highlighted the tension embedded in the policy: Brazil wants to reduce its dependence on foreign technology, yet is handing tax breaks to the very companies that dominate the industry.

Torto conceded that Brazil is unlikely to produce its own Google or Microsoft. Even so, local data centers could improve latency and keep more data inside the country.

"It's not just the model or the data center themselves; it's everything that goes around them that will be really the larger investment long term," he said.

Potential for backlash

Although Brazil has not experienced backlash on the scale seen in the U.S., resistance has begun to surface. Days before REDATA became law, Brazilian federal prosecutors went to court over a TikTok-linked data center project, seeking an environmental impact study and consultation with the Indigenous Anacé people before the facility could become operational. The case may offer an early indication of how environmental and Indigenous consultation requirements will be applied as buildout accelerates.

According to Nunes, opposition to data centers in Brazil is not as politically unified as in the U.S., where projects have drawn criticism from both the left and the right. Foreign investment, she said, still carries prestige in parts of Brazil, particularly among people who see it as a chance to join the global economy.

"For people who are so marginalized and pushed away from global systems, it's just like 'oh, Google is coming here, that's great,'" she said.

Nunes grew up in Goiânia, in central Brazil, near a Unilever factory that produced tomato paste. She recalled how proud her mother was of the family's connection to a global company, even as others worried about the factory's use of local resources.

"It felt like we were part of something big because we lived close to that company," Nunes said.

This story was originally featured on Fortune.com.