SpaceX Shares Plunge 7% as Midterm Sweep Hits Tech and AI Stocks

SpaceX shares fell more than 7% in early Friday trading, dragged down by a tech-wide selloff that followed the Democrats' midterm sweep. Tesla shares dropped more than 9% in the same session, and the tech-heavy Nasdaq Composite fell by more than 5% at one point in early trading.

The trigger isn't hard to find. Markets are pricing in tougher scrutiny of data centre construction and the broader AI industry after Democratic wins in key data centre states, including Texas.

What does the election actually change?

Texas governor-elect Gina Hinojosa campaigned heavily against data centres and has pledged a moratorium on new construction in the sector. That's a direct threat to the AI infrastructure pipeline, since Texas has become one of the biggest destinations for new compute capacity.

Elon Musk had spent nearly $450m backing Republican campaigns, including at least $45m supporting Ken Paxton's run for the Texas senate seat. Texas still turned blue in what the source calls a Democratic tsunami on Tuesday night. For Musk specifically, that's a double loss: political capital spent and a regulatory outlook that now leans hostile to data centre expansion.

The chipmakers are taking the worst of it

Semiconductor stocks have absorbed the heaviest losses over the past five days:

• AMD: down nearly 17%
• Micron: down more than 20%
• Intel: down more than 18%
• Nvidia: down more than 10%
• Philadelphia Semiconductor Index: down more than 13%

For context, a 13% index drop in five trading days is the kind of move that usually takes months to build. That pace signals genuine repricing of risk, not routine volatility.

Tech executives admit they were blindsided

Some tech leaders have said they were caught off guard by the backlash against data centres in the midterms. OpenAI president and co-founder Greg Brockman said he believed everyone had been surprised by the reaction, and more work was needed to ensure communities were on board.

"A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can't just tweet and say: 'This is going to be good.' You need to be in those communities," Brockman said at the WSJ Tech conference in Napa, California, on Wednesday evening.

Meta's president Dina Powell McCormick agreed the industry needs to improve how it communicates AI's benefits. "I think we need to double and triple down on telling the story," she told the WSJ conference.

Is there a bubble underneath?

Alongside the immediate electoral fallout, some investors have grown concerned that AI shares are in a bubble due for a correction. The election results may simply be the catalyst that forces a repricing that was already overdue in some portfolios.

What does this change for practitioners? If Texas follows through on its moratorium pledge, data centre site selection shifts toward states with friendlier administrations, and permitting timelines stretch. Executives who spent this cycle assuming community consent could be won with press releases now face a heavier lift: local engagement, state-level lobbying and contingency siting plans that most AI capex models don't currently price in.