Democratic Midterm Wins Drive Tesla and SpaceX Shares Lower

Democratic victories in the November 2026 midterm elections triggered declines in Tesla and SpaceX shares during Wednesday's premarket trading, as investors assessed the potential impact of new political leadership on artificial intelligence infrastructure and data center development across the United States.

According to CNBC, SpaceX shares fell 4.6%, while Tesla declined 4.4%. Both companies are closely associated with Elon Musk, who financially supported Republican candidates during the election campaign.

Musk spent at least $474 million on the midterm elections, including $224 million directed toward Texas, according to CNBC. Republican candidates Ken Paxton and incumbent Gov. Greg Abbott lost to Democratic challengers, marking a significant political setback for Musk in a state central to his business operations.

Texas is particularly important to the technology industry because it accounts for approximately 27% of planned US data center capacity, according to Wells Fargo estimates. Georgia represents another 7%, while Ohio and Pennsylvania each account for 5%.

SpaceX is developing several gigawatts of data center capacity, including projects in Texas. Investors are concerned that Democratic support for restrictions or temporary suspensions of new data center projects could complicate expansion plans.

Dan Ives, a partner at Yorkville Ives & Co., warned that the election results could create significant obstacles for the technology industry.

"There is no way to sugarcoat that Democrats taking control especially over the Senate will create some major hurdles for AI and tech legislation in the Beltway over the next 2 years," Ives said in a Wednesday morning note.

Ives also identified the Texas election as the biggest concern for technology investors because of the state's substantial share of planned data center capacity.

"Biggest worry" was how Ives characterized the Texas election's potential implications for technology investors and the AI market, according to CNBC.

Musk responded to the political developments by highlighting his interest in alternative infrastructure for artificial intelligence computing.

"Data centers in space looking pretty appealing right now," Musk wrote in a post on X early Wednesday, referring to his speculative plans to establish AI infrastructure beyond Earth.

Scott Ladner, chief investment officer at Horizon Investments, had previously identified the Texas governor's race as a particularly important factor for data center investment decisions.

"Because there is a legitimate question about where do you build these data centers?" Ladner said Tuesday as election results emerged.

He explained that Texas had traditionally provided favorable conditions for large-scale infrastructure development, making a change in state leadership potentially significant for the industry.

"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," Ladner added.

Democratic victories in other states with substantial data center development plans added to investor concerns. The results also came as technology stocks were already facing pressure over questions surrounding the sustainability of major artificial intelligence investments.

Ohsung Kwon, Wells Fargo's chief equity strategist, had warned that a Democratic victory in Texas could create significant downside risks for AI-related equities.

"Left-tail event" was Kwon's description of the potential consequences for the AI investment market if Democrats won the Texas governor's race, according to his report earlier in the week.

Michael Hartnett, an investment strategist at Bank of America, had also warned earlier in 2026 that Democrats taking control of the Senate alongside winning Texas could trigger a substantial market decline.

"Big slump" was Hartnett's description of a potential stock market decline exceeding 10% toward the end of the year.

Optimal Advisory's Washington policy team also highlighted the changing political environment surrounding data center construction and local government decisions.

"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," the policy team wrote earlier in the week. "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."

Despite pressure on several companies directly exposed to AI infrastructure spending, broader technology stocks showed mixed movements in Wednesday's premarket session. Nvidia, Alphabet, Meta and Microsoft gained approximately 1% to 2%, while Amazon advanced 2.7%.

Advanced Micro Devices climbed 6.3% following its earnings announcement Tuesday. Meanwhile, CoreWeave declined 0.8%, Iren fell 1.9%, Nebius Group gained 2.9% and Oracle lost 1.3%, according to CNBC.

The election results also followed a difficult period for technology equities, with the Nasdaq-100 entering correction territory at the end of October amid concerns about slowing data center spending by major technology companies and private AI developers OpenAI and Anthropic.