Musk's SpaceX, Tesla Slide as Texas Flips Blue, Data Center Fears Grow

Shares of Elon Musk’s SpaceX and Tesla fell sharply in premarket trading Wednesday after Democrats swept the midterm elections, including in Texas, where Musk’s companies are based and where he poured money into Republican campaigns, according to MarketWatch and CNBC.

SpaceX shares were down 3.6% in premarket trade, while Tesla fell 3.5%, MarketWatch reported. CNBC later reported that SpaceX had shed 7%. CoinDesk reported that SpaceX was down around 4% in Wednesday’s premarket trading.

Data centers in space looking pretty appealing right now

— Elon Musk (@elonmusk) November 4, 2026

The slide hit even as broader markets recovered from an overnight selloff. MarketWatch reported that, despite earlier weakness, AI stocks were largely in the green in premarket trade, with Nasdaq futures up 0.15%. CoinDesk reported that broader stock futures recovered from initial losses.

Texas flip puts data centers in the crosshairs

The biggest worry for investors was the Texas governor’s race. CNBC reported that Democrat Gina Hinojosa, who wants to enact an immediate moratorium on data centers in the state, defeated incumbent Republican Greg Abbott. According to Wells Fargo estimates cited by CNBC, 27% of planned data center gigawatts is in the Lone Star State.

Dan Ives, partner at Yorkville Ives & Co., wrote in a note Wednesday morning that the midterms will slow the pace of data center buildouts across the U.S., CNBC reported. Ives said there is no sugarcoating that Democratic control, especially of the Senate, will create major hurdles for AI and tech legislation in Washington over the next two years, according to CNBC. CNBC reported that Ives described the Texas result as the biggest worry of the night for tech investors and the AI trade.

Other AI infrastructure names also fell. CNBC reported that CoreWeave and Iren fell 7% and 6%, respectively, Nebius Group was down 3%, and Oracle shed 4.3%.

Musk responded on X in the early hours of Wednesday. “Data centers in space looking pretty appealing right now,” Musk wrote in a post on X. CNBC reported that he was referring to his speculative plans to build AI infrastructure off-planet.

Musk’s money did not carry Texas

CNBC reported that Musk spent a record of at least $474 million on the midterms and funneled $224 million into Texas alone, where Republican Senate nominee Ken Paxton and Abbott lost to Democrats. MarketWatch, citing campaign-finance filings reviewed by The Wall Street Journal, reported that Musk gave more than $250 million to Republican-aligned groups in the third quarter alone.

MarketWatch reported that Texas voters elected James Talarico as their first Democratic senator since 1988.

Analysts warned the political fallout could follow Musk’s companies for two years. XTB analyst Kathleen Brooks said that while Congress cannot stop a merger between SpaceX and Tesla, lawmakers could slow one down with extra scrutiny, according to MarketWatch. Brooks added that both companies now carry a political risk premium that could weigh on their share prices, MarketWatch reported.

For conservatives who saw Texas as the GOP’s firewall and Musk as the movement’s most powerful financial ally, Wednesday’s trading offered a blunt early verdict: the market is already pricing in what a Democratic Congress and a Democratic governor in Austin could mean for American AI investment, according to the reports. Whether lawmakers in Texas actually move on a moratorium is the next test.

Reporting by Daily Beltway.