Tesla, SpaceX Tumble As Blue Wave Hits Texas, Putting Musk’s Empire In Democrats’ Crosshairs

The Democratic midterm sweep threatens to complicate President Trump’s “America First” agenda. Still, the biggest risk to the nation’s industrial revival is at the state and local levels, as Democrats are set to push data center moratoriums.

At the state level, Democrats’ sweep of Texas will likely deliver a particularly hard blow to Musk, who uprooted operations to escape California Democrats years ago. Now, Tesla and SpaceX are clear targets for Texas Democrats.

Lefty James Talarico was elected as Texas senator, and Gina Hinojosa was elected governor, making them the first Democrats to win either office in more than a generation. These Democrats have called for immediate AI regulation and a moratorium on data centers, and there will likely be immense state-level lawfare against Musk’s Tesla and SpaceX empires.

The market seems to have priced in this fate for Musk’s empires, as Tesla and SpaceX are both down nearly 6% in premarket trading.

Musk, a top Republican donor, had contributed nearly $450 million to GOP coffers and urged his X followers to vote against Democrats.

First New York’s Vikram Rai told Bloomberg during an interview last week that both Tesla and SpaceX “have major headline risk if we get a blue sweep.”

Goldman expects: 

On AI and data center regulation, Democratic wins at the state and local level are likely to have significant implications. The Democratic side explicitly campaigned on stricter data center regulation, that could end certain tax breaks (a priority for Hinojosa), tighten environmental, water, and electricity rules, and make it easier for localities to impose their own moratoria. 

Goldman continues: 

The states where Democrats are likely to further restrict data centers account for roughly 45% of planned US data center capacity, with Texas alone accounting for roughly 25%.

However … 

We expect that the issue will fade somewhat in importance in the ensuing months and that these moratoria will not be long-lived if they are enacted. However, since data centers are low on the list of priorities for voters this election, we expect that the issue will fade somewhat in importance in the ensuing months and that these moratoria will not be long-lived if they are enacted.

Nasdaq futures tanked overnight, then ripped higher as Democrats won majorities in the House and Senate. But the trillion-dollar question is how the AI boom will continue with so many governors now opposed. The data center buildout is critical to Trump’s reindustrialization policies and efforts to bolster the economy, and one can only suspect that Dems will use their newfound power to derail data center buildouts and crush the economy ahead of the 2028 election.

Goldman on governors:

Republicans lost the gubernatorial elections in Texas, Ohio, Nevada, Georgia, and Michigan, and Democrats gained a trifecta in Pennsylvania and likely in Arizona as well. In each of these states except Ohio, the Democratic side explicitly campaigned on stricter data center regulation, and we expect Democratic governors in Texas, Georgia, and Michigan to impose conditional moratoria pending new legislation restricting data centers.

“Guess my election-interfering space lasers didn’t work this time,” Musk joked on X overnight.

He added, “Data centers in space looking pretty appealing right now.”

Which leaves us with another question: Will Musk stay in Texas?