The Democratic Party achieved a great victory in the mid-term elections in the United States, while Elon Musk donated $445 million to support the Republican Party, marking their defeat. The Democratic Party's control over Congress has increased the uncertainty surrounding AI regulation and potential mergers between Tesla and SpaceX. Expectations of stricter regulation for data centers in Texas are rising, putting pressure on Tesla's, SpaceX's, as well as NVIDIA's and CoreWeave's stock prices after the market closes.
The Republican Party suffered a defeat in the midterms, while the Democratic Party achieved a great victory. Musk's nearly $450 million political gamble on the Republican Party may thus come to nothing, and the stock prices of Tesla and SpaceX under his control are under pressure. Before the opening of U.S. markets,Tesla ( TSLA.US ) Plunged by more than 5%.SpaceX ( SPCX.US ) Tumbled nearly 5%.
On November 4th, Musk spoke in a self-deprecating tone on social media: 'My laser communication efforts to influence the election might not have worked this time.' Existing records show that in order to help the Republican Party in the United States win the midterms, Musk has donated $445 million to federal political committees, making him the largest individual donor for these midterms elections.
However, not only did the Democrats regain control of the House of Representatives, but they also won in the competition for several key Senate seats. According to the prediction of Decision Desk HQ, the Democrats will control both the Senate and the House of Representatives at the same time.
Analysts warn that a Democratic sweep of Congress will increase legislative pressure on the regulation of AI and may hinder the highly anticipated potential merger between Tesla and SpaceX. Meanwhile, Democratic candidate Gina Hinojosa is expected to be elected governor of Texas in the midterms. He has previously proposed to suspend new data center licensing applications and abolish current tax incentives, which has suddenly raised market expectations for tighter regulation of AI data centers in that state.
Elon Musk spent $445 million, but the Republicans still lost.
This midterm election in the United States can be considered the most costly in history. According to independent organizations that track campaign finances, Open Secrets, the total expenditure for this round of midterms is expected to approach $12 billion, an increase of about 30% compared to the 2022 midterms. As of mid-October, over $9.5 billion has been raised, with super political action committees (Super PAC) contributing more than half of that amount, at around $5.5 billion.
Among them, the scale of individual donations set a historical record. According to statistics from liberal-leaning think tanks Brennan Center, for, and Justice, as of October 14th, the top 40 donors had contributed a total of $2.4 billion, which is the highest level in the same period in the history of mid-term elections. American campaign finance expert Michael Beckel stated:
Expenditures for the mid-term elections in 2026 are setting records, with an increasing amount of funding coming from the wealthiest donors and groups.
Elon Musk's donation amount is far ahead among all individual donors. According to the records of the Federal Election Commission ( FEC ), as of October, he has donated nearly $445 million in total, with most of it going to the Super Political Action Committee America PAC he established in 2024, as well as the Republican Senate Leadership Fund. Geographically, his funding is highly concentrated in Texas, which is also the location of several of his companies – America PAC invested over $45 million in the Texas Senate elections to support Republican candidate Ken Paxton against Democratic candidate James Talar; in addition, about $10 million each was invested in the Senate elections in Michigan and Ohio.
Apart from Musk, other major donors are also very active. On the Republican side, Jeff Yass, one of the largest trading companies in the world, as well as the owners of American commercial supplies companies Richard and Elizabeth Uihlein, each donated over 100 million dollars to Republican-related causes this round. On the Democratic side, Geosor Corp and Fund under George Soros together with for and Policy Reform donated a total of 102 million dollars to liberal groups, while the former New York Mayor and businessman Michael Bloomberg donated over 60 million dollars. Brendan J Glavin of Open Secrets also pointed out that cryptocurrency companies were very active in this election, with Ripple and Coinbase together donating 63 million dollars to super political action committees that promote the interests of the crypto industry.
Tesla and SpaceX stock prices under pressure, merger timeline adds uncertainties
The impact of the election results on Musk's business empire stems not only from the wasted donations but also from the policy and regulatory risks brought about by the Democratic Party's takeover. The market's concerns about the Democrats sweeping control of Congress focus on two main issues: firstly, the Democrats tend to implement stricter regulations on AI, which could affect related businesses that Tesla and SpaceX are vigorously pursuing; secondly, resistance at the congressional level could slow down or even hinder the potential merger process between the two companies.
According to previous reports by Bloomberg citing informed sources, Musk's team is striving to announce the merger between Tesla and SpaceX in the first half of next year in order to complete the transaction before the end of Trump's term. The Vikram Rai of First New York told Bloomberg last week:
"If a Democratic sweep occurs, both of these stocks face significant headline risks."
Looking at historical data, the stock prices of Musk's companies are extremely sensitive to election results. After Trump's victory in 2024, Tesla's stock price soared by over 90% within just over a month. However, as Musk's relationship with Trump became more complex and investor fatigue regarding his leadership of the Department of Government Efficiency ( DOGE ) spread, the gains were gradually reversed. As of before this election, Tesla's stock price had rebounded by 34% from its low point at the end of July. SpaceX completed IPO earlier this year, and since then, the stock price has remained relatively stable, but its current market value is still around $1.9 trillion.
Nationwide Funds Group Chief Strategist Mark Hackett indicates:
"Before the election, narrative and sentiment are important driving forces, but once the election is over, fundamentals and reality will take back control of the market."
The Texas election situation stirs up the AI infrastructure sector
The impact of the election results on the tech sector was particularly evident in Texas. According to reports from American media cited by Xinhua News Agency, CNN predicted that Democratic candidate Gina Hinojosa would win the election as governor of Texas. Hinojosa made data center regulation a top priority during her campaign, advocating for an immediate suspension of new data center licensing applications until the state legislature enacted comprehensive protection measures, and called for the abolition of the current 20-year tax exemption policy for ultra-large data centers. She criticized this policy for costing Texas at least $1 billion in taxes each year.
Texas holds a pivotal position within the AI infrastructure landscape. According to a report by the American commercial real estate firm JLL, the state is expected to surpass North Virginia and become the largest data center market in the world by 2030, and is poised to account for about a quarter of the new data center capacity added in the United States by that time. The total data center projects announced locally amount to 13.3 gigawatts, including one that is touted as the largest in the world, as well as four data centers that Google has established in northwestern Texas.
However, rapid expansion has triggered a strong backlash locally. Residents' concerns about noise pollution, groundwater depletion, rising electricity costs, and encroachment on farmland have continued to accumulate, leading to the emergence of protest groups, some of which are led by Republicans. The victory of Hinojosa has raised these policy risks from the local public opinion level to the state-level governance level, hitting companies that rely heavily on data center capital expenditures, such as NVIDIA and CoreWeave. Both companies saw their stock prices decline after the announcement.
Similar political pressures are spreading simultaneously across multiple states: The Democratic candidate in Ohio, Sherrod Brown, has labeled the Republican opponent as "the spokesperson for data centers," and local voters are also pushing for a statewide referendum to ban the construction of data centers; the Democratic gubernatorial candidate in Wisconsin, Francesca Hong, has included "preventing AI data centers" in her campaign platform; the Democratic governor of Pennsylvania, Josh Shapiro, is under voter pressure for being perceived as overly welcoming to tech giants. This series of developments indicates that the regulatory battle over AI infrastructure is no longer confined to Washington and is gradually evolving into a political issue at the state level.
Edit / lambor
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