Musk Loses Key Allies After Spending $474 Million on Midterms

A sweeping Democratic victory in the November 4, 2026, US midterm elections has dealt a significant setback to Elon Musk's political ambitions, weakening his congressional alliances and raising questions about the future of his business expansion. Musk invested at least $474 million in Republican candidates, but several major contenders he supported lost their races.

According to CNBC's analysis of campaign finance records, Musk directed $224 million toward Texas, nearly half his total election spending. Republican Senate nominee Ken Paxton and Governor Greg Abbott both suffered defeats as Democrats made substantial gains across the state.

The election results also affected financial markets. Tesla and SpaceX shares declined overnight, while broader technology stocks faced pressure following the Democrats' victory and their expected control of Congress.

Voters also challenged the growing influence of billionaires and technology companies, particularly the artificial intelligence industry. Democratic Senator-elect James Talarico addressed campaign financing during his victory speech.

"We must get big money out of our politics, so no billionaire or trillionaire can buy our elections," said James Talarico, Democratic Senator-elect.

Talarico also called for changes to the economic system, arguing that its benefits remain concentrated among wealthy Americans.

"We must unrig this economic system that only benefits the top 1%," said James Talarico, Democratic Senator-elect.

J.C. Lintzenich, a visiting senior fellow at the German Marshall Fund, described the Texas results as a rejection of Musk's political influence within the Trump administration's circle. Speaking to CNBC on Wednesday, he highlighted the scale of Musk's financial involvement in the state.

"clearly a rejection of the Elon Musk aspect that has found its way into the Trump orbit," said J.C. Lintzenich, visiting senior fellow at the German Marshall Fund.

Texas remains central to Musk's business operations. Tesla runs its largest US vehicle factory outside Austin, while SpaceX launches rockets from its Starbase complex in South Texas. Musk is also pursuing additional investments in artificial intelligence and semiconductor manufacturing.

These operations depend on state decisions involving electricity, water, environmental permits, infrastructure and tax incentives. Democratic Governor-elect Gina Hinojosa could influence those policies after campaigning against corporate subsidies and Musk's business interests.

Hinojosa has proposed a moratorium on new data centers, eliminating industry tax breaks and requiring developers to cover their full electricity costs. During her victory speech Tuesday, she criticized the concentration of political influence among powerful individuals.

"powerful people who have gotten very comfortable running this state," said Gina Hinojosa, Democratic Governor-elect of Texas.

Republicans retain control of the Texas Legislature, limiting Hinojosa's ability to introduce sweeping legislative changes. However, her administration could make Musk's expansion plans more difficult through stricter permitting requirements and changes to business incentives.

Nationally, Musk's America PAC spent nearly $87 million across 44 federal races, according to CNBC's analysis of Federal Election Commission filings. By Wednesday morning, 29 Republican candidates backed by the organization had lost, three had won and 12 races remained uncalled.

More than $80 million, representing approximately 93% of the PAC's spending, went toward unsuccessful campaigns. The losses could leave Musk with fewer congressional allies as Democrats gain opportunities to investigate his federal contracts, his former leadership of Trump's Department of Government Efficiency and his companies' relationships with Washington.

Democratic congressional scrutiny could slow SpaceX's expanding government contracts. However, President Donald Trump retains control of executive agencies and veto authority, limiting the opposition's ability to reverse policies benefiting Musk's defense technology businesses.

Musk has previously experienced setbacks from political spending. America PAC supported eight unsuccessful congressional candidates in 2024. Last year, he also spent more than $20 million attempting to elect a conservative candidate in Wisconsin.

Despite previously promising to reduce his political contributions, Musk became the largest known donor in the 2026 midterms. His involvement had already raised concerns among investors about potential damage to his companies' customer relationships.

Longtime Tesla investor Ron Baron warned in March 2025 that Musk's political activism could alienate consumers across the political spectrum.

"I don't think it's a great thing to alienate half the population," said Ron Baron, longtime Tesla investor.

Technology industry figures also invested heavily in the elections. OpenAI President Greg Brockman and his wife, Anna, contributed $25 million to Leading the Future, a political operation seeking to influence AI regulation. Venture capital firm Andreessen Horowitz contributed another $50 million, according to campaign finance filings.

However, the industry encountered resistance over data center expansion. In Ohio, Democrat Sherrod Brown defeated Republican Senator Jon Husted after criticizing his support for data centers.

In South Carolina, Democrat Annie Andrews defeated Republican Senator Darline Graham despite a late advertising campaign supporting Graham. Building the Future, a newly established data center industry political action committee, had reserved $1.5 million in advertising for the Republican candidate.

Andrews campaigned on a two-year moratorium on new data centers. Nationwide, campaigns and outside organizations spent $173 million on data center advertisements during the 2026 general election, according to AdImpact. Approximately $140 million came from Democratic advertisers, while the advertisements were overwhelmingly negative.

Local opposition also emerged through ballot measures. Voters considered 41 proposals concerning data centers on Tuesday, with at least 10 communities approving bans or restrictions on new developments.

The financial implications extend beyond individual election campaigns. JPMorgan Asset Management estimates that the infrastructure expansion required to support artificial intelligence could cost approximately $5 trillion.