Shares in Tesla and SpaceX fell on Wednesday after election results brought setbacks for Elon Musk’s political allies. Tesla dropped as much as 6.13%, while SpaceX declined up to 5.78%. At about 1 p.m. Brasília time, the companies were down 3.49% and 3.73%, respectively.
The results included Democratic victories in both chambers of Congress and Gina Hinojosa’s win over Greg Abbott in the Texas governor’s race, according to media projections cited in the report. James Talarico was also projected to defeat Ken Paxton in the Senate contest. Musk had spent nearly $500 million backing Republican candidates, including efforts to keep Texas under Republican control.
The political shift could bring greater scrutiny of Musk’s businesses. Democrats have raised concerns about satellite communications restrictions affecting Ukraine’s military, federal layoffs during Musk’s tenure at the Department of Government Efficiency, and government contracts and subsidies for his companies.
Data center approvals are another potential point of pressure for SpaceX. The company has highlighted a $28.5 trillion addressable market to investors ahead of its planned IPO, while analysts expect Democrats to increase oversight of data center projects and support construction moratoriums as local opposition grows over electricity costs.
Hinojosa has called for an immediate pause on new data center projects until stronger protections for local communities are in place, as well as an end to tax incentives. She has also accused Abbott of offering favorable deals to Musk and said Texas was not for sale.
SpaceX’s AI operations center on its Colossus and Colossus 2 data centers near Memphis. The company plans to increase computing capacity from 1.7 gigawatts at the end of September to as much as 3 gigawatts by year-end, and then to 13 gigawatts next year. Delays could undermine Musk’s revenue targets and heighten investor concerns about the rising cost of AI infrastructure.
Musk appeared to play down the challenge, posting on X that space-based data centers looked attractive. The report notes that the plan faces significant cooling and repair challenges. Shares in several other major technology companies rose on Wednesday, including Amazon, Alphabet and Meta.
Sources: Folha Mercado.