As Republicans suffered a crushing defeat and Texas elected its first Democratic governor in more than three decades, one of the biggest losers of the midterm elections was not on the ballot: billionaire Elon Musk.
The world’s richest person has spent nearly half a billion dollars supporting Republican candidates and keeping Texas in the red – a state that is home to his automaker Tesla, AI rocket company SpaceX and a chipmaking project in between.
Those bets collapsed when Democrats captured both houses of Congress and Gina Hinojosa beat Greg Abbott in the Texas gubernatorial race, in a scathing rebuke of President Donald Trump, a close Musk ally whom the billionaire helped elect.
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Musk, who urged his supporters on X to vote Republican as recently as Tuesday, now faces a resurgent Democratic Party that he spent years antagonizing.
The Republican Party’s largest donor even threatened retaliation last month on his social media platform after a report said Democrats were considering opening investigations into his companies if they won the midterm elections.
SpaceX shares fell 3.8% in premarket trading, while Tesla shares fell 3.6%, with both stocks lagging the broader market.
One of Musk’s biggest challenges could be the slowdown in data center approvals, key to tapping the $28.5 trillion addressable market that SpaceX touted to investors ahead of its IPO.
Analysts and experts expect Democrats to tighten their control over data center projects and push for construction moratoriums as local opposition grows over electricity costs.
“A Democratic victory in Congress would put pressure on technology and potentially put regulatory pressure on all things AI and perhaps slow the Wild West growth numbers that we see daily and often take for granted,” said Jake Dollarhide, CEO of Longbow Asset Management.
“Musk was the Hail Mary for Republicans until the end. Unfortunately, his large infusion of cash to support red states could not overcome rising utility bills, prices at the grocery store, and prices at the gas pump.”
Musk also drew Democratic lawmakers’ attention to restrictions on satellite communications used by Ukraine’s military, massive federal job cuts under his leadership at the Department of Government Efficiency, or DOGE, and government contracts and subsidies awarded to his companies.
One of the lawmakers is Robert Garcia, the next chairman of the House Oversight Committee, who on Tuesday evening delivered a direct, two-word message to Republicans and their allies: “Advocate stand up.”
In Texas, Musk may also have to contend with the tenuous relationship between him and Hinojosa.
The new governor had filed a lawsuit seeking emails between Musk and Abbott and accused the former governor of selling out the Lone Star State by offering deals favorable to the billionaire.
She also dismissed Abbott’s efforts to rein in data centers as political theater, instead calling for an immediate halt to new projects until lawmakers strengthen protections for local communities, as well as an end to tax breaks.
Musk himself seemed to mock the obstacles. “Data centers in space look pretty attractive right now,” he posted on X, hinting at SpaceX’s ambitious plan to put data centers in orbit despite major cooling and repair challenges.
The company’s AI operations are centered on Colossus and Colossus II, two of the world’s largest AI data centers located near Memphis. Leasing their computing power to clients including Anthropic caused its revenue to skyrocket and helped SpaceX make its first profit as a public company.
But the company aims to almost double its capacity, from 1.7 gigawatts at the end of September to 3 gigawatts by the end of the year, before increasing to 13 gigawatts next year.
Any delay in bringing this capability online could hamper Musk’s ambitious revenue goals and intensify scrutiny from investors increasingly wary of the rising costs of AI infrastructure.
Chip research firm SemiAnalysis has identified more than 9 gigawatts of capacity planned or in development, including new facilities at SpaceX’s Starbase complex in Boca Chica, Texas.
The Boca Chica expansion may face resistance as Hinojosa opposed the potential sale of an oceanfront state park to SpaceX after Texas Monthly reported that officials discussed the deal.
“Let’s be clear: Texas is not for sale,” Hinojosa said last month. Musk, meanwhile, deleted his Election Day call for his supporters to vote Republican.
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