Elon Musk spends $450 million on Republicans in Texas. Then a blue wave hits and SpaceX shares plunge 9% by lunch: ‘Fresh panic’
Changing tides?
The landscape for tech stocks turned incredibly shaky this week. According to the BBC, shares in Elon Musk’s SpaceX took a massive hit, dropping more than 9% by lunchtime on Thursday, November 5, 2026. This decline followed a broader downturn across the tech and artificial intelligence sectors. The market reaction arrived just one day after the Democratic party secured a sweep in the midterms.
This drop was not limited to SpaceX alone. Tesla shares experienced an even steeper decline, falling more than 11% during the same Thursday trading window. These losses weighed heavily on the Nasdaq Composite index, which saw a decline of more than 5% during early trading hours. The S&P 500 index also felt the pressure, dropping 3.8% by lunchtime. Investors are reacting to the possibility of much tougher scrutiny regarding data center construction.
The Democrat wins in key states like Texas have changed the political outlook for the industry. Susannah Streeter, chief investment strategist at Wealth Club, noted that the sell-off on the Nasdaq and the S&P 500 was sending shockwaves into other markets. She said, “Fresh panic over the AI trade has hit Wall Street hard.”
Streeter offered further context to the situation
“Fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on are now colliding with the prospect of a sharp slowdown in data centre construction.” This sentiment seems to be driving a lot of the volatility we are seeing right now.
Musk spent a significant amount of money backing Republican campaigns during the cycle. Reports indicate he spent nearly $450 million in total support, including at least $45 million directed toward the Texas senate bid of Ken Paxton. However, the political tide shifted, and Texas turned blue during the election. Governor-elect Gina Hinojosa campaigned with a strong focus on data centers. She pledged to enact a moratorium on any new construction in the sector.
The impact of the election results extends well beyond the companies directly owned by Musk. Chipmakers have also seen their values drop significantly. AMD shares fell more than 14% on Thursday. Micron shares dropped by as much as 17% before seeing a slight recovery. Intel shares are down more than 7%, and Nvidia shares have fallen nearly 9%. The Philadelphia Semiconductor Index saw a decline of 10% as well.
The financial fallout for Musk has been substantial
SpaceX and Tesla lost over $420 billion in combined market cap following the midterms. When looking at the close of business on Thursday, the total loss reached about $456 billion. Musk’s personal wealth, which had reached over $1 trillion after the SpaceX initial public offering in June, has dropped below $800 billion. He has seen a loss of about $90 billion in just the past week, though he remains the richest person in the world.
Tech leaders appear to be reflecting on their approach to these infrastructure projects. Many acknowledged they need to improve how they communicate about the benefits of AI and the role of data centers. OpenAI president and co-founder Greg Brockman spoke at the WSJ Tech conference in Napa, California, on Wednesday evening. He said he believed everyone had been surprised by the reaction to data centers, and more work needed to be done to ensure communities were on board.
Brockman added, “A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities.”
Meta president Dina Powell McCormick echoed this perspective. She told the conference that the industry needs to improve its messaging. “I think we need to double and triple down on telling the story,” she said.
Both Tesla and SpaceX are headquartered in Texas
The companies are currently building out AI infrastructure in the state. They have plans for a massive facility in Grimes County, known as Terafab, which would include both a data center and a semiconductor factory. SpaceX also has plans to build a supercomputer at its Starbase, Texas, facility.
Analysts at Deutsche Bank shared their concerns in a note on Wednesday. According to CNBC, they wrote, “While policy is naturally hard to predict, we could envision SpaceX facing some incremental headwinds in this type of backdrop.” They also pointed out that Hinojosa made data centers a major campaign issue. She called for a moratorium on new approvals until the legislature passes stronger protections on water use, electricity costs, local control, and incentives.
Beyond the immediate market reaction, there is talk of potential regulatory hurdles. Some investors are concerned that Musk could face new congressional probes. There is also the possibility of tighter regulations that might block any potential merger between SpaceX and Tesla. While Musk has promoted the idea of a merger, it would require shareholder approval.
Additionally, SpaceX has been instructed to preserve records regarding restrictions on a military version of the Starlink satellite service in Ukraine. These restrictions reportedly hindered the country’s ability to defend against Russian attacks. The current market environment suggests that investors are worried about these various pressures colliding at the same time.
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