"In the Spotlight": Why Tesla and SpaceX Stocks Are Falling Despite the Market's Uptrend

Shares of Elon Musk’s companies, Tesla and SpaceX, fell by more than 2% during trading in New York, bucking the broader market’s upward trend. The stocks came under pressure after Democrats secured majorities in both chambers of the U.S. Congress and won several gubernatorial races in the midterm elections.

Democratic control of Congress—and especially of the Senate— “will create significant obstacles to AI and technology legislation in Washington for the next two years,” wrote Dan Ives, a partner and managing director at Yorkville, in a note cited by Yahoo Finance. According to Ives, the situation affects Texas-based SpaceX, which is expanding its own AI infrastructure and preparing for a possible merger with Tesla.

"SpaceX and Musk found themselves right at the center of this web," he wrote.

"Major tech companies will have to adapt to the new political landscape," Ives noted. He estimates that a Democratic victory will slow down the construction of 800–1,000 AI data centers planned across the country. The analyst sees the main risk for investors in Texas, where 25% to 30% of the country’s future data center capacity is concentrated.

Democratic candidate Gina Inohosa unexpectedly won the Texas gubernatorial election. Incumbent Republican Governor Greg Abbott had previously imposed a temporary moratorium on the approval of new data centers in the state, and the market had assumed that the moratorium would be lifted if he were re-elected, according to Yahoo Finance.

“Inohosa is a well-known politician who opposes data centers and is skeptical of the development of AI infrastructure, so the future of data center construction in Texas is becoming a real problem for investors in the technology sector,” Ives noted.

Musk himself reacted to the election results on the social media platform X: “Data centers in space are looking pretty appealing right now.”

The construction of data centers has become one of the central issues in the 2026 midterm elections. Candidates have faced growing opposition from residents against the siting of these facilities, the expansion of power grids, and potential increases in electricity bills. Back in October, Ben McMillan, Chief Investment Officer at IDX Advisors, warned that dissatisfaction with data centers was uniting voters from both parties, while strategists at Evercore cited the Texas gubernatorial election as a key risk for the sector. BlackRock CEO Larry Fink noted that a moratorium on the construction of such facilities could plunge the U.S. economy into a recession, as a significant portion of it relies on investment in AI infrastructure.

Political risks are compounding the market’s existing caution: in recent weeks, concerns about the financing of cloud providers have weighed on technology stocks, while semiconductor manufacturers’ shares have pulled back from their highs. Nevertheless, in the long term, Ives remains optimistic about the AI sector. The analyst believes that the market is currently underestimating future revenue and profit growth in this sector.

Fundstrat strategist Tom Lee is also optimistic. Even before the election results were announced, he noted that President Donald Trump could veto any “anti-AI” bills. Furthermore, according to Lee, Democrats may support data centers, as they bring investment and jobs.

This article was AI-translated and verified by a human editor