Tesla and SpaceX Lose Over $420 Billion in Market Value After US Midterm Results

Tesla and SpaceX have lost more than $420 billion in combined market value following the November 2026 US midterm elections, as investors reassess the political and regulatory risks facing Elon Musk’s businesses. The sell-off intensified on November 5, when Tesla shares fell more than 11% and SpaceX shares declined nearly 9%, adding to losses recorded in the previous session.

The market reaction reflects concerns that Democratic victories in key Texas races and changes in the political landscape could bring greater scrutiny of Musk’s companies and slow data-centre development. The potential impact extends beyond the two businesses: SpaceX has expanded into AI computing, while Tesla is targeting data-centre operators with its energy-storage products.

Tesla and SpaceX Lose More Than $420 Billion

The combined market value of Tesla and SpaceX fell sharply over two trading sessions following the election results.

According to estimates reported by Moneycontrol, the two companies lost approximately $420 billion in market capitalisation. Fortune separately calculated a decline of around $456 billion between Tuesday night’s market close and Thursday night’s close, illustrating how the estimated loss changes depending on the measurement period and share prices used.

Tesla shares declined more than 11% on November 5, while SpaceX shares dropped nearly 9%. The declines followed losses during the previous trading session, extending the sell-off across both companies.

The broader technology market also experienced heavy selling, with investors reducing exposure to AI-related companies, semiconductor manufacturers and businesses connected to data-centre expansion.

The decline represents a substantial reduction in the companies’ market valuations, not an immediate loss of $420 billion in cash or operating revenue. Market capitalisation changes when investors reassess the prices they are willing to pay for a company’s shares.

Why the US Midterm Elections Affected Musk’s Companies

The election results changed the political environment in which Musk’s businesses operate.

Democratic candidates secured victories in several important Texas races, including contests for governor, the US Senate and attorney general. Texas is particularly important to Musk because both Tesla and SpaceX have major operations in the state.

Musk had spent heavily supporting Republican candidates and political groups during the election campaign. The Democratic victories raised concerns among investors that his companies could face closer scrutiny from state and federal authorities.

The political reaction also reflects Musk’s prominent relationship with Republican leaders and his involvement in government-related activities.

Investors are concerned that a less favourable political environment could affect regulatory approvals, government contracts and major infrastructure projects.

However, the election results do not automatically mean that existing business agreements will be cancelled or that new restrictions will immediately take effect. The impact will depend on specific policy decisions, investigations and regulatory actions.

Data Centre Restrictions Could Affect SpaceX’s AI Business

One of the biggest concerns surrounding SpaceX is its growing exposure to the artificial intelligence infrastructure market.

The company has increasingly expanded beyond its traditional rocket-launch and satellite-internet businesses into AI computing.

According to Reuters, more than half of SpaceX’s third-quarter sales came from renting out computing capacity. This makes the company increasingly dependent on demand for AI infrastructure and the expansion of data centres.

Texas has become an important location for data-centre development because of its land availability, energy resources and industrial infrastructure.

However, data centres have also become a political issue as communities raise concerns about electricity consumption, water requirements, environmental effects and pressure on local power networks.

Goldman Sachs analysts estimated that Democratic gains at the state and local levels could lead to temporary restrictions on data-centre construction, potentially affecting approximately 45% of planned US data-centre capacity expansion.

Such restrictions could delay new facilities, complicate construction schedules and affect demand for computing infrastructure.

For SpaceX, this creates a potential challenge because its AI computing business depends on the continued expansion of facilities that require substantial electricity and investment.

Tesla’s Energy Business Is Also Exposed to Data Centre Demand

Tesla is connected to the data-centre expansion through its energy business.

The company’s energy division sells battery-storage systems, including its Megapack products, to utilities, businesses and large infrastructure operators.

Data centres require reliable electricity supplies because even short interruptions can disrupt computing operations. Battery-storage systems can help manage electricity demand, provide backup capacity and support grid stability.

As AI facilities become larger, their electricity requirements are increasing. This creates opportunities for companies supplying energy-storage equipment and related power infrastructure.

Tesla has been positioning its energy business to benefit from this demand.

However, if restrictions slow the construction of new data centres, some planned energy-storage purchases could also be delayed.

This does not mean that Tesla’s entire energy business depends on AI infrastructure. Its products serve several other markets, including utilities and renewable-energy projects. Nevertheless, the data-centre opportunity has become an increasingly important part of the growth narrative surrounding the business.

Musk’s $119 Billion Terafab Project Faces Additional Uncertainty

Another major project potentially affected by the changing political environment is Terafab, a proposed chip-manufacturing complex announced by Musk in October 2026.

The project is planned as a joint Tesla-SpaceX initiative in Texas and could involve investment of up to $119 billion.

Terafab is intended to strengthen access to advanced semiconductor manufacturing capacity for Musk’s businesses.

The initiative reflects growing demand for specialised chips used in AI computing, robotics and other advanced technologies.

However, a project of this scale would require substantial capital, infrastructure development, electricity supply and regulatory coordination.

Any restrictions affecting industrial development, data-centre infrastructure or semiconductor manufacturing could complicate its execution.

The proposed investment figure is an upper-end project estimate, not money already spent or a confirmed final construction budget.

Investors are therefore assessing whether the project can move forward on its intended schedule and whether the companies can justify the financial commitment.

Potential Tesla-SpaceX Merger Faces Regulatory Questions

The election results could also complicate discussions surrounding a possible merger between Tesla and SpaceX.

Musk said during SpaceX’s third-quarter earnings call that a merger between the two companies would be a good idea. Special committees at both businesses were reportedly examining the possibility.

A combination could bring together Tesla’s electric vehicles, battery-storage technology and robotics ambitions with SpaceX’s launch operations, satellite communications and expanding AI computing business.

However, combining two major companies with different operations, shareholders, regulatory obligations and government relationships would involve significant legal and financial complexity.

A potential merger could face scrutiny from regulators responsible for competition, securities and government contracting.

Analysts cited by Reuters suggested that the political changes could make the regulatory process more difficult if the transaction proceeds in 2027.

There is no confirmed merger agreement or completed transaction. The discussions remain exploratory, and the election results do not by themselves determine whether a deal will happen.

AI Stock Sell-Off Adds to the Pressure

The declines in Tesla and SpaceX also occurred during a wider technology-market sell-off.

Investors have become increasingly cautious about the enormous amounts being committed to AI infrastructure and whether future revenues will justify the spending.

The Nasdaq Composite fell 5.52% on November 5, while semiconductor companies also experienced substantial declines.

Nvidia alone lost approximately $440 billion in market value during the session, according to Moneycontrol.

The broader correction suggests that the pressure on Musk’s companies was not exclusively political. Concerns about AI valuations, infrastructure spending and the outlook for technology earnings also contributed to the market reaction.

For investors, the combination of political uncertainty and broader technology-sector weakness created additional reasons to reassess valuations.

The Bigger Picture

The sell-off highlights how closely Musk’s business empire has become connected to the future of AI infrastructure, energy systems and government policy. SpaceX is expanding into computing, Tesla is pursuing energy-storage opportunities and both companies are linked through the proposed Terafab project and potential merger discussions.

The political environment can influence the pace of infrastructure development, but it is not the only factor determining business performance. Electricity availability, customer demand, capital costs and the ability to generate returns from AI investments will remain important. The decline in market capitalisation reflects investor expectations and uncertainty rather than a confirmed deterioration in the companies’ underlying operations.

Looking Ahead

Investors will monitor whether the incoming political leadership introduces restrictions affecting data-centre construction, semiconductor facilities and major industrial projects in Texas and other states. Any changes could influence SpaceX’s AI computing ambitions, Tesla’s energy-storage opportunities and the proposed Terafab investment. Regulatory developments surrounding a potential Tesla-SpaceX merger will also remain important.

The companies’ next financial disclosures will help determine whether the market concerns are translating into changes in revenue, investment plans or customer orders. For now, the loss of more than $420 billion in combined market value demonstrates how quickly political developments and changing expectations around AI infrastructure can affect even some of the world’s largest technology businesses.