Elon Musks record election bet backfired. The backlash may reach beyond one billionaire

Democrats’ sweeping midterms victory marked a major rejection of Elon Musk and the artificial-intelligence industry, as a broad backlash against U.S. President Donald Trump and his tech allies put their political influence — and the debt-fueled data center buildout — under sharper scrutiny.

Musk, who spent a record of at least $474 million on the midterms, funneled $224 million, or nearly half, into Texas alone, according to a CNBC analysis of campaign finance records, only to see his favored candidates, Republican Senate nominee Ken Paxton and Gov. Greg Abbott, trounced in a Democratic wave.

The defeats rattled markets overnight, sending SpaceX and Tesla shares lower, both of which have long flourished under Abbott’s business-friendly. Meanwhile, broader tech stocks came under pressure as Democrats secured control of Congress.

Across the country, voters pushed back against billionaire influence and the growing power of technology companies, electing critics of the AI industry and approving restrictions on data centers fueling its expansion.

“We must get big money out of our politics, so no billionaire or trillionaire can buy our elections,” Democratic Senator-elect James Talarico said in his victory speech, without naming Musk. “We must unrig this economic system that only benefits the top 1%.”

J.C. Lintzenich, a visiting senior fellow at the German Marshall Fund, pointed to Musk’s massive spending in Texas, telling CNBC’s “Squawk Box Europe” on Wednesday that the results were “clearly a rejection of the Elon Musk aspect that has found its way into the Trump orbit.”

Texas has grown to be homebase for much of Musk’s Empire. Tesla operates its largest U.S. vehicle factory outside Austin, SpaceX launches rockets from its Starbase complex in South Texas, and Musk is pursuing additional investments in AI and semiconductor manufacturing.

These operations rely heavily on state decisions regarding electricity, water, environmental permits, infrastructure, and tax incentives. Democratic Governor-elect Gina Hinojosa — who campaigned against generous corporate subsidies, and Musk himself — will wield significant influence over those decisions.

Hinojosa has called for a moratorium on new data centers, an end to industry tax breaks and requirements that developers cover their full electricity costs. In her victory speech Tuesday, she vowed to take power from the “powerful people who have gotten very comfortable running this state.”

Republicans still control the Legislature, limiting Hinojosa’s ability to overhaul state policy. But her administration could complicate Musk’s expansion plans with a tougher approach to permitting and business incentives.

Nationwide, Musk’s America PAC spent nearly $87 million across 44 federal races, according to a CNBC analysis of FEC filings. By Wednesday morning, Republicans it backed had lost 29 contests and won just three, with 12 still uncalled. More than $80 million — or 93% of its spending — went toward races Republicans lost.

The outcome leaves Musk with fewer allies in a Democratic-controlled Congress that could investigate his federal contracts, his past leadership of Trump’s Department of Government Efficiency and his companies’ ties to Washington.

Congressional scrutiny may slow SpaceX’s lucrative and fast-growing government contracts, but Trump still controls executive agencies and holds veto power, limiting Democrats’ ability to reverse policies that benefit Musk’s defense-tech businesses.

The defeats aren’t the first time that Musk’s political spending has failed to produce his desired result.

America PAC backed eight losing congressional candidates in 2024, and last year Musk spent over $20 million trying to elect a conservative in Wisconsin. Though Musk promised last year to spend “a lot less” on politics, he ultimately became the biggest known donor in the 2026 midterms.

Longtime Tesla investor Ron Baron warned in March 2025 that Musk’s political activism risked driving away customers, telling CNBC: “I don’t think it’s a great thing to alienate half the population.”

Others cheered Musk’s close relationship with Trump, and his influence over everything from regulation to Pentagon tech spending.

Musk was not the only tech figure who spent big.

OpenAI President Greg Brockman and his wife, Anna, contributed $25 million to Leading the Future, a political operation seeking to shape AI regulation, according to FEC filings. Venture capital firm Andreessen Horowitz contributed another $50 million.

While the industry secured some victories – such as defeating New York lawmaker Alex Bores, an advocate for tougher AI safeguards, in a Democratic congressional primary – winning over local communities proved far more difficult.

In Ohio, Democrat Sherrod Brown defeated Republican Sen. Jon Husted after attacking his support for data centers. Democrats spent nearly $28 million on advertisements criticizing data centers, according to AdImpact.

In South Carolina, Democrat Annie Andrews defeated Republican Sen. Darline Graham despite a late advertising push by Building the Future, a new data center industry super PAC that made Graham its first candidate to back. The group reserved $1.5 million in ads supporting Graham, while Andrews campaigned for a two-year moratorium on new data centers.

Nationwide, campaigns and outside groups spent $173 million on ads about data centers during the 2026 general election, with the ads almost entirely negative, according to AdImpact. Democratic advertisers accounted for $140 million of that spending. Voters also considered 41 local data center measures Tuesday, with at least 10 communities approving bans or restrictions.

The financial stakes are enormously high.

JPMorgan Asset Management estimates the AI infrastructure buildout could cost roughly $5 trillion through 2030, including about $2 trillion financed through investment-grade debt markets.

Projects cannot generate anticipated returns until fully operational. Permitting delays can postpone completion and revenue, while higher utility and borrowing costs can raise project expenses and make expected returns harder to achieve.