The Democratic Party's resounding victory in the midterms marks a significant rejection of Elon Musk and the artificial intelligence industry. The widespread backlash faced by U.S. President Donald Trump and his tech allies has also subjected their political influence, as well as the debt-driven boom in data center construction, to more stringent scrutiny.
According to the analysis of campaign financial records by CNBC, Musk spent at least $474 million in these mid-term elections, setting a record. Of that amount, $224 million—no, the correct figure is $224 million—was allocated to Texas; however, the candidates he supported—the Republican Senate nominee Ken Paxton ( Ken Paxton ) and Governor Greg Abbott ( Greg Abbott )—still suffered heavy losses amidst the Democratic wave.
These losses hit the market overnight, with both SpaceX and Tesla's stock prices declining. Both companies have long benefited from Abbott's pro-business policy environment. At the same time, as the Democrats took control of Congress, a broader range of tech stocks also came under pressure.
Across the United States, voters expressed opposition to the influence of billionaires and the growing power of tech companies. They elected candidates who criticized the AI industry and approved measures to restrict data centers that drive its expansion.
Democratic Senator-elect James Tarrantico ( James Talar token issuance ) said in his victory speech: "We must drive big money out of our political system, so that no billionaires or trillionaires can buy our elections." He did not mention Musk by name. He also said: "We must correct this economic system that only benefits the top 1%."
German Marshall Fund visiting senior researcher J.C Lin Cennich ( J.C . Lintzenich ) pointed out Musk's large-scale expenditures in Texas. On Wednesday, he stated in the CNBC program " Squawk Box Europe " that this result "is clearly a negation of the Musk factor that has already joined Trump's camp."
Texas has become the stronghold of Musk's empire. Tesla operates its largest automobile factory in the United States near Austin, while SpaceX launches rockets from its Starship base (Starbase) in southern Texas. Moreover, Musk is also pursuing additional investments in artificial intelligence and semiconductor manufacturing.
These businesses rely heavily on state government decisions regarding electricity, water resources, environmental permits, infrastructure, and tax incentives. Gina Hinojosa ( Gina Hinojosa ), who was elected as governor as a Democrat and campaigned primarily against generous corporate subsidies and against Elon Musk himself, will have significant influence over these decisions.
Xinojosa called for a pause on the construction of new data centers, the cancellation of industry tax incentives, and demanded that developers bear all electricity costs. In her victory speech on Tuesday, she vowed to take power back from “those who are already very accustomed to governing this state.”
The Republican Party still controls the state legislature, which limits Hinojosa's ability to carry out thorough reforms to state policies. However, her administration may create more obstacles to Musk's expansion plans through stricter licensing procedures and business incentive policies.
Defeats across the country
According to the analysis of documents from the U.S. Federal Election Commission by CNBC, Musk's America PAC spent nearly 87 million dollars across 44 federal campaigns. By Wednesday morning, the Republican candidates supported by this organization had lost 29 campaigns, winning only 3, with 12 campaigns still undecided. More than 80 million dollars, which is 93% of the total expenditure, went towards the Republican campaigns that ultimately lost.
This result means that Musk will have even fewer allies in a Congress controlled by Democrats. Congress may investigate his federal contracts, his past experience leading Trump's 'Government Efficiency Department', as well as the connections between his companies and Washington.
Congressional scrutiny may slow down the lucrative and rapidly growing government contracts of SpaceX, but Trump still controls the executive branch and has the veto power, which limits the Democrats' ability to reverse policies that are favorable to Musk's defense technology business.
These defeats are not the first time that Musk's political spending has failed to yield the results he desired.
America PAC supported 8 defeated congressional candidates in 2024, while last year Elon Musk spent over $20 million attempting to help a conservative candidate get elected in Wisconsin. Despite Musk's promise last year to spend "much less" on politics, he ultimately became the largest donor known in the 2026 mid-term elections.
Long-term Tesla investor Ron Barron ( Ron Baron ) warned in March 2025 that Musk's political activities could drive customers away. He said about CNBC: "I don't think alienating half of the population is a good thing."
There are also those who welcome the close relationship between Musk and Trump, as well as his influence over matters ranging from regulation to Pentagon technology spending.
Tech industry rebound
It's not just Elon Musk who has made significant investments.
According to the FEC document, Greg Brockman ( Greg Brockman ), the president of OpenAI, and his wife Anna ( Anna ) donated $25 million to the political organization Leading the Future. This organization attempted to influence the regulation by AI. The venture capital firm Andreessen Horowitz donated an additional $50 million.
Despite some victories in the industry—such as defeating New York Representative Alex Borres ( Alex Bores ) in the Democratic Party's primary elections, who advocated for stricter AI security measures—winning over local community support is much more difficult.
In Ohio, Democrat Sherrod Brown (Sherrod Brown) defeated Republican Senator Jon Hesterd (Jon Husted), who was attacked during the campaign for his support of data centers. According to data from AdImpact, Democrats spent nearly 28 million dollars on advertisements criticizing data centers.
In South Carolina, Democrat Annie Andrews (Annie Andrews) defeated Republican Senator Daryn Graham (Darline Graham), despite a newly established super political action committee in the data center industry (Building the Future) increasing its advertising efforts in the later stages of the campaign and targeting Graham as its primary support candidate. This organization allocated $1.5 million for advertising in support of Graham, while Andrews advocated for a two-year moratorium on the construction of new data centers.
According to AdImpact, nationwide, campaign teams and external organizations spent $173 million on advertising around data centers during the 2026 elections, and almost all of it was negative advertising. Democratic advertisers contributed $140 million of this amount. On Tuesday, voters also voted on 41 local data center proposals, with at least 10 communities approving bans or restrictive measures.
The financial stakes are extremely high.
JPMorgan Asset Management estimates that by 2030, the total cost of AI infrastructure construction could amount to about $5 trillion, of which approximately $2 trillion will be financed through the investment-grade bond market.
These projects cannot generate the expected returns before they are fully operational. Delays in licensing approvals may postpone completion and revenue recognition, while higher utility and borrowing costs will increase project expenditures, making it more difficult to achieve the expected returns.
