Democrats secured a sweeping midterms victory that marked a major rejection of Elon Musk and the artificial-intelligence industry. A broad backlash against U.S. President Donald Trump and his tech allies placed their political influence and the debt-fueled data center buildout under much sharper scrutiny.
Setbacks for Musk in Texas and Nationwide
Musk spent a record of at least $474 million on the midterms, directing $224 million into Texas alone, based on a CNBC analysis of campaign finance records. Despite this spending, his favored candidates, Republican Senate nominee Ken Paxton and Gov. Greg Abbott, were defeated in a Democratic wave. These losses rattled markets overnight, pulling down shares of SpaceX and Tesla, both of which have long benefited from Abbott’s business-friendly policies. Broader tech stocks also faced pressure as Democrats took control of Congress.
According to a CNBC analysis of FEC filings, Musk’s America PAC spent nearly $87 million across 44 federal races nationwide. By Wednesday morning, Republicans backed by the PAC had lost 29 contests and won only three, with 12 races remaining uncalled, meaning 93% of that spending went toward losing efforts. J.C. Lintzenich, a visiting senior fellow at the German Marshall Fund, told CNBC’s “Squawk Box Europe” that the results were clearly a rejection of the Elon Musk aspect that integrated into the Trump orbit.
Texas has served as the homebase for much of Musk’s empire, including Tesla’s largest U.S. vehicle factory near Austin and SpaceX’s Starbase launch complex in South Texas. These operations rely heavily on state decisions regarding infrastructure, water, electricity, environmental permits, and tax incentives. Democratic Governor-elect Gina Hinojosa, who campaigned against corporate subsidies and Musk himself, will now influence those decisions. Hinojosa has called for a moratorium on new data centers, an end to industry tax breaks, and requirements that developers cover their full electricity costs. Although Republicans still control the Legislature, her administration could complicate Musk’s expansion plans.
The outcome leaves Musk with fewer allies in a Democratic-controlled Congress that could investigate his federal contracts, his past leadership of Trump’s Department of Government Efficiency, and his companies’ ties to Washington. While congressional scrutiny may slow SpaceX’s government contracts, Trump still controls executive agencies and holds veto power, limiting Democrats’ ability to reverse policies favoring Musk’s defense-tech businesses. This is not the first time Musk’s political spending has missed its mark, following losses by America PAC-backed candidates in 2024 and a failed $20 million effort in Wisconsin last year. Longtime Tesla investor Ron Baron warned in March 2025 that Musk’s political activism risked driving away customers, telling CNBC that alienating half the population is not a great thing.
Broader Industry Backlash
Musk was not the only prominent tech figure to spend heavily on the elections. OpenAI President Greg Brockman and his wife, Anna, contributed $25 million to Leading the Future, a political operation aiming to shape AI regulation, while venture capital firm Andreessen Horowitz added $50 million, according to FEC filings. While the industry notched some victories, such as defeating New York lawmaker and AI safety advocate Alex Bores in a Democratic primary, winning over local communities proved far more difficult.
In Ohio, Democrat Sherrod Brown defeated Republican Sen. Jon Husted following attacks on his support for data centers, with Democrats spending nearly $28 million on related advertisements, according to AdImpact. In South Carolina, Democrat Annie Andrews defeated Republican Sen. Darline Graham despite a $1.5 million ad push from Building the Future, a new data center industry super PAC that backed Graham. Andrews campaigned for a two-year moratorium on new data centers. Across the country, campaigns and outside groups spent $173 million on ads concerning data centers during the 2026 general election, with Democratic advertisers accounting for $140 million of that spending. Voters also considered 41 local data center measures, with at least 10 communities approving bans or restrictions.
“We must get big money out of our politics, so no billionaire or trillionaire can buy our elections,” Democratic Senator-elect James Talarico said in his victory speech without naming Musk, adding that the economic system must be unrigged.
The financial stakes for the infrastructure buildout remain massive, with JPMorgan Asset Management estimating costs could reach roughly $5 trillion through 2030, including about $2 trillion financed through investment-grade debt markets. Projects cannot generate expected returns until they are fully operational, meaning permitting delays can postpone revenue, while higher borrowing and utility costs can increase project expenses.
