Billionaire Elon Musk emerged as one of the biggest losers of the US midterm elections after Republicans suffered a landslide defeat and Texas elected its first Democratic governor in more than three decades.
Musk spent nearly half a billion dollars backing Republican candidates and trying to keep Texas under Republican control, a state home to his automaker Tesla, rocket and artificial intelligence company SpaceX, and a planned chipmaking venture involving the two companies.
However, Democrats seized both chambers of Congress, while Gina Hinojosa defeated Greg Abbott in the Texas governor's race, dealing a major blow to US President Donald Trump, a close ally whom Musk helped elect.
Musk, who urged his followers on X to vote Republican as recently as Tuesday, now faces a resurgent Democratic Party that he has spent years antagonising.
The Republican Party's largest donor had threatened retaliation last month on his social media platform after reports emerged that Democrats were considering investigations into his companies if they won the midterms.
Shares of SpaceX fell 5.5%, while Tesla dropped 5.1%, with both stocks underperforming the broader market.
One of Musk's biggest challenges could be slower approvals for the data centres crucial to tapping the $28.5 trillion addressable market that SpaceX presented to investors ahead of its initial public offering.
Analysts and experts expect Democrats to increase scrutiny of data-centre projects and push for construction moratoriums as local opposition grows over electricity costs.
"A Democratic sweep of Congress would put pressure on tech and potentially bring regulatory pressure on everything AI and possibly slow down the wild, wild west growth figures that we see daily and often take for granted," said Jake Dollarhide, CEO of Longbow Asset Management.
"Musk was the Hail Mary for Republicans leading down to the wire. Unfortunately, his large infusion of cash to back red states could not overcome higher utility bills, prices at the grocery store and prices at the gas pump," he added.
Musk has also faced scrutiny from Democratic lawmakers over restrictions on satellite communications used by Ukraine's military, mass federal job cuts during his tenure at the Department of Government Efficiency (DOGE), and government contracts and subsidies awarded to his companies.
One of the lawmakers is Robert Garcia, the incoming chair of the House Oversight Committee, who delivered a blunt two-word message to Republicans and their allies on Tuesday evening: "Lawyer up."
In Texas, Musk will have to navigate an already strained relationship with Hinojosa. He will also face newly elected US Senator James Talarico, against whom Musk spent heavily while backing Republican Ken Paxton.
Hinojosa had sued to obtain emails between Musk and Abbott, accusing the outgoing governor of selling out the state by offering favourable deals to the billionaire.
She also dismissed Abbott's efforts to regulate data centres as political theatre, calling instead for an immediate halt to new projects until lawmakers strengthen protections for local communities and an end to tax breaks for the industry.
Musk appeared to make light of the potential obstacles, writing on X: "Data centers in space looking pretty appealing right now."
His comment referred to SpaceX's ambitious plan to put data centres in orbit, despite significant challenges involving cooling systems and repairs.
SpaceX's AI business is centred around Colossus and Colossus II, two of the world's largest AI data centres near Memphis. Renting their computing power to customers, including Anthropic, has driven a surge in revenue and helped SpaceX post its first profit as a public company.
The company aims to nearly double its computing capacity from 1.7 gigawatts at the end of September to as much as 3 gigawatts by the end of this year, before expanding it to 13 gigawatts next year.
Any delays in bringing the additional capacity online could undermine Musk's ambitious revenue targets and intensify investor concerns over the mounting costs of AI infrastructure.
Chip research firm SemiAnalysis has identified more than 9 gigawatts of planned or developing capacity, including new facilities at SpaceX's Starbase complex in Boca Chica, Texas.
The expansion in Boca Chica could also face resistance as Hinojosa has opposed a potential sale of a beachfront state park to SpaceX, following a report by Texas Monthly that officials had discussed the deal.
"Let me be clear: Texas is not for sale," Hinojosa said last month.
Musk, meanwhile, has deleted his election-day appeal urging followers to vote Republican.