Probably, given it's famously a desert, but the water issues for DCs are a meme rather than the actual limiting factor even in Arizona's case.

Last time this came up in an HN discussion, I looked at the sources and noticed that all 108 DCs in Arizona combined currently use about as much water as about 3k residents: https://news.ycombinator.com/item?id=45952965

How big is the rejected new DC compared to all the existing ones combined? I could believe just about anything in the current bubble, but that's where we're at for the existing ones.

It's already home to the largest nuclear power plant in the continental US (Palo Verde), and there are essentially no natural disasters to contend with.

Indeed, the Salt River Project nuclear generator uses reclaimed sewage water for cooling.