Tesla and SpaceX Down 6% to 7% Pre-Market After Democrats Win Texas Governor and Senate Seats; Data Center Stocks Slide

Since AP race calls gave Democrats both chambers of Congress, the market focus has shifted from Washington to Austin, where the Texas results are hitting the AI build-out and Elon Musk's companies hardest.

Regular U.S. trading has not started. The moves below are pre-market and early indications, not opening prices.

What happened in Texas

Democrat Gina Hinojosa unseated Republican Gov. Greg Abbott. Democrat James Talarico beat Republican nominee Ken Paxton for the U.S. Senate seat.

Hinojosa has said she wants an immediate moratorium on data centers in the state. According to Wells Fargo, 27% of planned U.S. data center gigawatts sit in Texas.

Wells Fargo chief equity strategist Ohsung Kwon warned in a report this week that the market reaction to the midterms "mostly depends on the outcome of the Texas governor's race." He called a Democratic win a potential "left-tail event to the AI trade."

Dan Ives of Yorkville Ives & Co. said in a Wednesday note that Texas was the "biggest worry" of the night for tech investors. He said 25% to 30% of data center capacity will come from there. He also said the elections will slow the pace of U.S. data center buildouts and create "major hurdles for AI and tech legislation" over the next two years.

Musk's companies take the hit

Tesla shares were down about 6% pre-market and SpaceX about 7%. Both companies are based in Texas. Tesla runs its Austin gigafactory and a robotaxi service in several Texas cities, and SpaceX launches Starship from Starbase near Boca Chica.

Business Insider calculated that if the drops hold at the open, the two companies would lose more than $200 billion in combined market value.

Musk spent heavily on the other side. The New York Times put his Texas spending at about $224 million, including $158 million in September alone. Tallies of his total midterm giving range from at least $446 million to at least $474 million. Both Paxton and Abbott lost.

Musk responded on X. He wrote that data centers in space looked "pretty appealing right now," a reference to his speculative plans for off-planet AI infrastructure. He added: "Guess my election-interfering space lasers didn't work this time."

SpaceX is currently building multiple gigawatts of data center capacity, including projects in Texas. Ives, who is bullish on both Musk companies, said Musk "needs to find the path forward with Texas now."

AI infrastructure names slide

In early moves, CoreWeave was down 7%, Iren 6%, Nebius 3% and Oracle 4.3%. Nvidia was slightly lower.

Alphabet, Meta and Microsoft mostly bucked the trend and were higher.

The pressure lands on a trade that was already shaky. The Nasdaq-100 fell into correction territory at the end of October on concerns that spending growth by the big hyperscalers, OpenAI and Anthropic was slowing.

Beyond Texas

Democrats also won or kept governorships in other data-center-heavy states. Wells Fargo estimates Georgia holds 7% of planned U.S. data center gigawatts, and Ohio and Pennsylvania 5% each.

Goldman Sachs said Democrats campaigned explicitly on stricter data center rules. Those could end certain tax breaks, which Hinojosa has made a priority. They could also tighten environmental, water and electricity rules and make it easier for localities to impose their own moratoria.

Goldman estimates the states where Democrats are likely to restrict data centers account for roughly 45% of planned U.S. capacity, with Texas alone near 25%.

First New York's Vikram Rai told Bloomberg last week that Tesla and SpaceX "have major headline risk if we get a blue sweep."

The Democratic position is plain from their own campaigns. Hinojosa and other Democrats ran on tighter limits on data centers, including ending tax breaks and allowing local moratoria. None of the notes cited here quantifies how many projects would actually be halted.

The gap between Wednesday's pre-market drops and what any new rules would do is large. Hinojosa's moratorium is a campaign promise, and no source details how it would be enacted. Investors will get the first real read at the 9:30 a.m. ET open, when it becomes clear whether the 6% to 7% declines in Tesla and SpaceX hold.