Democratic Midterm Wins Pressure SpaceX, Tesla and AI Stocks

Major Democratic victories in the 2026 US midterm elections triggered declines in technology stocks on Wednesday, Nov. 4, as investors assessed potential restrictions on artificial intelligence infrastructure projects. SpaceX and Tesla faced particular pressure, while several companies involved in developing data centers also recorded losses during premarket trading.

SpaceX shares fell 3.9%, while Tesla declined 3.6%. Both companies are associated with Elon Musk, who had supported Republican candidates during the elections, many of whom suffered significant losses.

The selloff extended to companies directly involved in AI infrastructure. CoreWeave, a cloud computing provider that finances data center expansion through borrowing, dropped 4.2%. Nebius Group lost 1.5%, while Oracle shares declined 2.4%.

Texas emerged as a major concern for investors after Democrat Gina Hinojosa was projected to defeat incumbent Republican Gov. Greg Abbott, according to the Associated Press. The state's political direction matters because Texas represents a substantial share of planned US data center capacity.

Scott Ladner, chief investment officer of Horizon Investments, identified the Texas gubernatorial contest as a significant factor for technology investors as election results emerged.

"The one thing that could really end up moving stuff though would be if Abbott were to lose Texas. Because there is a legitimate question about where do you build these data centers?" said Scott Ladner, chief investment officer of Horizon Investments.

Ladner highlighted Texas as an important destination for data center development, emphasizing the potential consequences of a change in state leadership.

"Texas is a fertile ground for that. And if he were to lose, I think that fertile ground is largely barren. So, that's going to be a challenge," added Ladner.

Hinojosa has publicly supported a moratorium on AI data centers. According to Wells Fargo, Texas accounts for 27% of planned data center capacity measured in gigawatts across the United States.

The political shift adds uncertainty to an AI investment sector that has already faced growing concerns about infrastructure spending. The Nasdaq-100 entered correction territory at the end of October amid questions about whether major technology companies and private AI developers were slowing their data center investments.

Ohsung Kwon, Wells Fargo's chief equity strategist, identified the Texas election result as a potentially significant risk for technology stocks in a report published earlier that week.

"We believe the equity market reaction from the midterms mostly depends on the outcome of the Texas governor's race — a Dem win could potentially be a left-tail event to the AI trade," warned Kwon.

Democrats were also projected to win or retain governorships in Georgia, Pennsylvania and Ohio, three other states considered important markets for data center development. Wells Fargo estimates Georgia represents 7% of planned US data center capacity, while Ohio and Pennsylvania each account for 5%.

Earlier in 2026, Bank of America investment strategist Michael Hartnett warned that a Democratic Senate victory combined with a Democratic takeover of the Texas governorship could trigger a stock market decline exceeding 10% by year-end.

Washington policy analysts at Optimal Advisory also highlighted the growing political resistance to data center development, particularly among local and state officials.

"Data centers went from being a popular economic development tool in 2024 and 2025 to something of a pariah by the time the midterm campaigns gathered steam," wrote the Washington policy team at Optimal Advisory.

The analysts also pointed to potential consequences for infrastructure projects as elected officials respond to changing political priorities.

"The midterms are likely to send a message to local and state officials that there is a political upside to blocking, delaying and/or raising the cost of data centers," the Optimal Advisory team wrote.