How a blue wave crushed the tech right

• Elon Musk spent $446 million on the midterm elections. He ended up one of the biggest losers.
• Democrats tapped into voter fury over data centers encroaching on their neighborhoods.
• Markets are confident in Big Tech stocks, but CEOs may now have to face Congressional subpoenas.

For Elon Musk, $446 million wasn't much. It amounted to about a twentieth of a percent of his net worth.

In the world of politics, it seemed like a tsunami. Ultimately, Musk was the one drowned by a wave.

For all the money he spent to help Republicans win the midterms — and keep his political grip on Texas, the state where Tesla and SpaceX are headquartered — Musk was one of the biggest losers.

The blue wave that swept America on election night was a repudiation of President Donald Trump's policies, including tariffs and a war in Iran that fueled inflation. It was a backlash against data centers, the physical symbols of how artificial intelligence has been taking over the world. And it was a rebuke to Silicon Valley elites and their vision for the future.

Trump's presidential term doesn't end for another two years. But the sea change toward Democrats could still have serious consequences for the tech titans like Musk.

SpaceX and Tesla shares were down 5% and 2% in Wednesday trading, respectively, after Texas voters pushed out longtime Republican governor Greg Abbott and elected Democratic candidate James Talarico for the US Senate.

"Data centers in space looking pretty appealing right now," Musk wrote on X.

An AI reckoning is here

The market Wednesday showed that it still has confidence in many Big Tech companies, including Microsoft, Amazon, and Google parent Alphabet. Share prices slipped for chip makers Nvidia and TSMC. Worse off were Neocloud companies, which provide cloud computing services for AI customers. CoreWeave shares fell 9% Wednesday, while Nebius Group fell more than 6%.

It isn't all bad news for tech billionaires. In California, they appear likely to defeat a billionaire wealth tax, the prospect of which had led Google cofounders Larry Page and Sergey Brin to leave the state. Voters may even pass a competing measure pushed by Gov. Gavin Newsom that would ban future wealth taxes.

It has been two years since Big Tech bent the knee to Trump after he won the 2024 presidential election. Tech's biggest players had made a big bet on artificial intelligence, and they needed a friend in the White House. Meta CEO Mark Zuckerberg, Amazon, and others donated to his inaugural fund. Big Tech companies also put millions toward Trump's White House ballroom project.

Tech giants since then have been spending mind-boggling sums of money to build data centers. They sparked anger among voters concerned that mammoth projects would drive up their electricity bills, guzzle water, and create air and noise pollution. Nationwide, data centers have decreased neighbors' water pressure, strained electric grid systems, and increased reliance on heavily polluting fossil fuels, such as natural gas or coal.

NBC News' exit poll Tuesday found that 76% of voters would oppose the construction of a new data center in their community; 56% said AI and data centers were a crucial or major factor in their vote for Congress.

In more than 50 local ballot measures, voters had the chance to express their displeasure toward data center construction. Results haven't been tallied for all of those elections, but the early results are clear: More than 30 measures restricting data centers passed, many of them in Ohio, home to a key data center for OpenAI's $500 billion Stargate project. Gina Hinojosa, Texas's Democratic governor-elect, has pledged to impose an immediate moratorium on building new data centers in the state. League City, a town outside Houston, also voted for a ballot measure rejecting Flock license-plate reader cameras, which many consider an intrusive form of surveillance.

Democrats tapped into voter fears that AI could wipe out jobs — or all of humanity. When they take over Congress, they could force a reckoning for Big Tech's no-holds-barred AI acceleration. Democrats will now be able to subpoena tech executives and require them to testify on Capitol Hill. Sen. Ed Markey, a Democrat from Massachusetts, wrote on X that tech executives "are going to need to plant new forests for all of the subpoenas we'll be printing."

At the same time, Big Tech leaders may be able to use the increased oversight as an excuse if they don't deliver on the sky-high valuations and ambitious promises they have made to investors.

Don't mess with Texas

Musk moved Tesla's corporate headquarters to Austin in 2021. Tesla and SpaceX both then reincorporated in Texas in 2024. Musk said he moved the companies to the Lone Star State for more favorable tax, land acquisition, and corporate legal policies.

Tesla now has a large manufacturing facility outside Austin, Texas, and the company's robotaxi service operates in multiple cities across the state. SpaceX, meanwhile, launches its Starship rocket from its Starbase facility in Boca Chica, near the Mexican border.

Much of Musk's political donations this year went toward supporting Ken Paxton, the powerful but controversial longtime Texas state attorney general running for US Senate. The state hadn't elected a Democrat statewide since 1988. Trump won the state in 2024 by 14 points. Paxton seemed like a safe bet.

Instead, Democrat James Talarico, a state representative from Austin who put criticism of billionaires controlling politics at the center of his campaign, trounced Paxton by 12 points. More shockingly, Abbott, who ran for reelection as governor, lost to a Democratic candidate who a year ago was an obscure state legislator.

Dan Ives, the founder of research firm Yorkville Ives who is bullish on SpaceX and Tesla, said in a Wednesday note that Musk "needs to find the path forward with Texas now with a Democratic win on both the Senate and Governor race."

Musk had clashed with Talarico, who, in his acceptance speech, singled out the richest man in the world and likened his win to the story of David and Goliath.

"We just proved that all the money in the world is no match for the people of Texas," Talarico said.

Musk reacted on X to the Democratic sweep.

"Guess my election-interfering space lasers didn't work this time," he wrote.

Ben Shimkus contributed to this story.