Elon Musk's push to influence the 2026 US midterm elections has turned into an expensive setback, according to EFN. The world's richest man put close to half a billion dollars behind Republican candidates, and on Wednesday morning his two main holdings were falling in pre-market trading as Democrats made strong gains at the polls.
SpaceX, Musk's rocket and AI venture, was down 3.8 percent before the opening bell, while Tesla traded 3.6 percent lower, EFN reports. A Democratic win in the Texas governor's race added further pressure on data center stocks, a sector closely tied to Musk's business interests.
Why it matters
The reaction suggests investors are weighing two things at once: the direct cost of Musk's political spending and the policy consequences of a changed political map in Texas, where much of his corporate footprint sits. Texas has been treated as a welcoming environment for data center construction, and a shift in the governor's office raises questions about how smoothly those projects proceed.
EFN notes that Musk has been reported as the largest individual donor of this election cycle. According to CNN, cited by EFN, he gave more than double the roughly $177 million that Democratic donor George Soros directed to independent political groups during the 2022 cycle — a notable figure given Musk's repeated public criticism of Soros's political funding.
Texas result lands hardest on tech
Markets had largely anticipated a Democratic win in the House and possibly control of the Senate. What appears to have caught investors off guard was the governor's race in Texas, where signs increasingly pointed to a victory for Democrat Gina Hinojosa, CNBC reported according to EFN. Tech share prices fell overnight as those signals mounted.
Before the result, Scott Ladner, chief investment officer at Horizon Investments, told CNBC that a loss by Governor Greg Abbott would be the one outcome capable of unsettling the sector. He described Texas as a highly favorable market for data centers and said that if Abbott were to lose, that advantage would largely disappear, creating a real challenge for the industry.
The stakes are concrete. A prior Wells Fargo analysis found that 27 percent of all planned data center gigawatts are located in Texas, EFN reports. That concentration explains why the state's governorship carries outsized weight for AI-related equities.
The pressure spread across the sector. Neocloud company CoreWeave, which builds data centers using borrowed money, fell 2.6 percent, while peer Nebius slipped modestly and Oracle lost 1.6 percent, according to EFN. These companies had already been under strain on the stock market amid recent concerns about financing.
A market already on edge
The midterm fallout arrives at a sensitive moment for the AI trade, which had been leading US equities. The Nasdaq 100 entered a correction phase in late October, EFN reports, after worries that data center investment growth from major hyperscalers and private AI players such as OpenAI and Anthropic was set to slow.
Ohsung Kwon, head of equity strategy at Wells Fargo, warned earlier in the week that the market's response to the midterms would hinge mainly on the Texas governor's race. A Democratic victory, he said according to CNBC, could prove an extremely negative event for the AI trade.
Musk himself addressed the night with characteristic humor. Swedish outlets Omni and Göteborgs-Posten both reported that he joked about the loss, saying his "space lasers" had not worked — a remark that did little to change the tone in pre-market trading.
For now, the numbers tell the story EFN laid out: a record-scale donation, two flagship companies under selling pressure, and a state-level political shift that investors regard as a direct threat to the economics of AI infrastructure. What to watch next is whether the Texas governor's race is formally confirmed and how quickly data center permitting and investment plans in the state respond.
