Elon Musk spent nearly $500 million on the midterms and lost big — now his AI empire faces a new threat

Elon Musk invested nearly $500 million in the 2026 midterm elections, supporting Republican candidates and political groups. However, Democrats gained control of both chambers of Congress, and Texas elected its first Democratic governor in over three decades. Musk's businesses, particularly his AI infrastructure in Texas, may face consequences due to these election results.

Gina Hinojosa, the new governor, has proposed a moratorium on new data center development, which could impact Musk's plans. Musk's AI infrastructure in Texas includes massive data centers supporting his Grok chatbot and agent Grok Bot. The incoming governor's proposal to restrict data center development presents a new challenge for Musk's AI empire.

Meanwhile, public attitudes towards data centers are changing. In the November 4 election, 45 local ballot measures addressed data center development nationwide, with 33 favoring restrictions on construction. These restrictions included temporary construction moratoriums and prohibitions on facilities with high electricity demand. Residents near proposed data centers have expressed concerns about electricity prices, water consumption, noise, pollution, and the financial burden of infrastructure upgrades.

Musk's existing data centers, such as the Colossus data centers near Memphis, Tennessee, have already faced legal challenges. A federal judge recently rejected a motion to dismiss a lawsuit brought by the NAACP, alleging that the turbines used for electricity expose residents to harmful pollution.

Despite the political shift and regulatory challenges, Musk's AI infrastructure projects continue to require substantial investment. However, new restrictions in Texas and growing support for local communities may complicate expansion efforts. While the immediate impact on Musk's AI plans remains uncertain, the political and regulatory landscape is shifting, potentially affecting the future of his AI empire.