SpaceX, Tesla extend losses as midterm results cloud data center, merger outlook

Key Points:

• SpaceX and Tesla, both headquartered in Texas, have faced significant market losses following Democratic wins in key state races, with Tesla shares dropping over 11% and SpaceX nearly 9%.
• The Democratic victories raise concerns about increased regulatory scrutiny on Musk's businesses, particularly affecting data center expansions, as Texas may impose short-term moratoria impacting about 45% of planned US data center capacity.
• SpaceX has heavily invested in AI computing, generating over half of its third-quarter sales from renting computing capacity, while Tesla's energy division supports data center infrastructure with storage solutions.
• Musk announced a major joint Tesla-SpaceX chip manufacturing project called Terafab in Texas, valued at up to $119 billion, but the new political landscape could complicate plans for a potential merger between the two companies.
• Analysts suggest that a SpaceX-Tesla merger, previously considered feasible, now faces a tougher regulatory environment due to the Democratic control in Texas and Washington, potentially delaying the deal until 2027.