Tesla and SpaceX shares drop after Democratic election gains raise AI data center concerns

Market reaction to the election results

Tekedia reports that shares of Elon Musk’s Tesla and SpaceX were lower before the market opened on Wednesday after Democratic candidates won important US midterm races. The article says SpaceX was down 3.8% and Tesla was down 3.5% at the time cited. According to Tekedia, the losses came as investors reassessed the political and regulatory outlook for large artificial intelligence infrastructure projects.

Why Texas became the main focus

The report says the Texas results drew the most attention because both Tesla and SpaceX have significant operations in the state. Tekedia says Republicans backed by Musk lost badly there. It also reports that Musk had put at least $474 million into supporting candidates in the midterm elections, including $224 million in Texas races. According to the article, Republican Senate nominee Ken Paxton and incumbent Governor Greg Abbott lost to Democratic candidates, which it describes as a major setback for Musk’s political efforts.

Tekedia says the Associated Press projected Democrat Gina Hinojosa as the winner over Abbott in the Texas governor’s race. Hours after the results were known, Musk wrote on X, “Data centers in space looking pretty appealing right now.” The article says he was referring to his speculative idea of building AI infrastructure beyond Earth, while noting that the technology and commercial feasibility remain uncertain.

What investors fear for AI data centers

The article says the election has sharpened attention on future data center construction in the United States. Tekedia reports that Democrats have supported restrictions on new AI data center projects, citing concerns about electricity use, strain on infrastructure and effects on local communities. It says the possibility of tougher permitting rules or moratoriums is now a new risk for companies investing heavily in AI computing capacity.

Tekedia says SpaceX is building several gigawatts of data center capacity, including projects in Texas, making the state’s political direction especially important for its plans. The article adds that Texas has become a major destination for data center investment because of land availability, energy resources and its business climate. It says a change in leadership could alter the regulatory environment, especially if limits on new facilities gain support.

Wider state and industry implications

According to Tekedia, Hinojosa has publicly backed a moratorium on AI data centers. The article says investors paid attention to that position because Wells Fargo estimates Texas accounts for 27% of planned US data center capacity, measured in gigawatts. It also says Democrats won or held governorships in other states that matter to the industry, including Georgia, Pennsylvania and Ohio. Tekedia reports Wells Fargo estimates those states account for 7%, 5% and 5% of planned US data center capacity, respectively.

The article says the effects could reach beyond Tesla and SpaceX. Tekedia reports that technology firms and infrastructure providers have already committed large sums to facilities that support AI training, cloud computing and other high-performance workloads. It says delays, higher development costs or restricted access to electricity could affect both timing and economics.

Views from investors and policy analysts

Tekedia reports that Scott Ladner, chief investment officer of Horizon Investments, said before the results that the Texas governor’s race was the main market factor to watch. He said, “The one thing that could really end up moving stuff though would be if Abbott were to lose Texas,” and added that Texas was “a fertile ground” for data centers and would become a challenge if Abbott lost.

The article also says Optimal Advisory’s Washington policy team described a change in attitudes toward data centers in a report this week. It quotes the team as saying data centers moved from being a favored development tool in 2024 and 2025 to becoming “something of a pariah” during the midterm campaigns. The team also said the midterms could encourage local and state officials to block, delay or raise the cost of data centers.

Mixed trading across the AI sector

Tekedia says the election-related pressure on Musk’s companies came alongside mixed trading in AI-related stocks. The report says neocloud providers CoreWeave and Iren fell 2.6% and 2.8%, while Nebius Group was little changed and Oracle dropped 1.3%. It says Nvidia, Alphabet, Meta, Amazon and Microsoft each rose by about 1% to 2%, and Advanced Micro Devices climbed 6.8% after earnings released Tuesday. Nasdaq-100 futures were flat, while the State Street Technology Select Sector SPDR ETF gained 0.7%.

The article says these moves suggest investors were not treating the election result as the same risk for every company tied to AI. Tekedia says firms that build data centers and deal directly with local permitting face different pressures from companies whose businesses include advertising, software, cloud services and chips.

Broader market concerns and open questions

Tekedia reports that investors were already debating whether AI spending can continue at its current pace. The article says the Nasdaq-100 entered correction territory at the end of October amid worries that capital spending by major cloud providers and private AI companies such as OpenAI and Anthropic could slow.

The report says Wells Fargo chief equity strategist Ohsung Kwon had warned that a Democratic win in Texas could be a major downside risk for AI stocks. Tekedia quotes Kwon as writing that the market reaction would depend mostly on the Texas governor’s race and that a Democratic victory could be a “left-tail event” for the AI trade. The article also says Bank of America strategist Michael Hartnett had warned earlier in the year that Democrats winning the Senate together with the Texas governorship could lead to a stock market drop of more than 10% by year-end.

Tekedia says the election results do not automatically mean that planned projects will be canceled or that states will impose moratoriums. The immediate risk, according to the article, is that political opposition could make data center projects slower, more expensive, or harder to approve.