Shares of Elon Musk’s SpaceX plunged alongside major technology and artificial intelligence stocks on November 5, as investors grew concerned that the Democratic victory in the US midterm elections could slow the expansion of data centres. The sell-off reflected growing uncertainty over the future of AI infrastructure spending and the possibility of tighter regulatory scrutiny.
SpaceX shares fell nearly 9% during Thursday trading, while Tesla shares dropped more than 11%. The losses extended the decline from the previous trading session and hit companies closely associated with Musk’s expanding AI ambitions.
Democrats’ Victory Raises Data Centre Concerns
The market reaction followed Democratic victories in key US midterm races, including elections in Texas, where data centre development has become a major political issue.
Several Democratic candidates campaigned on restricting or slowing new data centre construction. Texas governor-elect Gina Hinojosa, for instance, supported a moratorium on new data centre projects.
Investors fear that stricter local regulations could delay or cancel infrastructure projects that are central to the growth plans of AI companies. SpaceX has increasingly expanded into AI computing, with more than half of its third-quarter sales reportedly coming from renting out computing capacity.
Chipmakers Also Face Heavy Selling
The sell-off extended across the semiconductor industry, which has benefited significantly from rising AI infrastructure investments.
Nvidia shares declined around 9%, while AMD and Micron recorded losses of more than 17% at points during trading. Intel also fell, reflecting broader concerns about the outlook for technology and AI-related businesses.
The Philadelphia Semiconductor Index, which tracks major chip companies, dropped more than 12%, marking one of its sharpest single-day declines in recent years.
Musk’s Political Spending Adds to the Spotlight
Musk had spent nearly $450 million supporting Republican campaigns during the midterm elections, including at least $45 million backing Ken Paxton’s Texas Senate campaign.
The Democratic victories have raised questions about the political and regulatory environment facing Musk’s businesses. SpaceX and Tesla are both headquartered in Texas, where data centre expansion and AI infrastructure have become increasingly contentious issues.
Potential Tesla-SpaceX Merger Faces More Uncertainty
The election results could also complicate discussions around a potential merger between Tesla and SpaceX. Musk had previously described the combination as a good idea, with special committees at both companies exploring the possibility.
Analysts believe the political shift could make regulatory approval more challenging in 2027.
The latest market reaction highlights how AI companies are increasingly exposed not only to technology and business risks but also to political decisions. Investors are now watching whether governments will continue supporting rapid AI infrastructure expansion or introduce tighter controls on data centre development.
