Elon Musk floats space data centers as Democratic sweep puts pressure on AI trade
AI infrastructure stocks have fallen 50-60% from summer highs as Democratic victories raise concerns about construction restrictions.
The struggling AI infrastructure trade faces new challenges after Democrats took control of both chambers of Congress on Tuesday, triggering fears of tighter restrictions on data center construction. Democrat Gina Hinojosa's projected victory in Texas heightened those concerns, as she supports a moratorium on AI data centers.
Texas accounts for 27% of planned U.S. data center power capacity, making Hinojosa's position a focus for investors. These concerns were reflected in early trading, with AI infrastructure stocks CoreWeave and Applied Digital falling about 3.3% and 3%, respectively, while IREN dropped 4.3%.
Market Impact
Shares of CoreWeave, Cipher Digital, IREN and Nebius are down roughly 50% to 60% from their highs as investors question spending, borrowing and future returns. However, broader stock futures recovered from initial losses as Invesco QQQ tech futures are up 0.3% pre-market, while bitcoin is above $78,000.
Data centers in space looking pretty appealing right now
Space Alternative
Elon Musk and investor Chamath Palihapitiya both discussed opportunities in space as Democratic election victories raise concerns about the future of U.S. AI infrastructure. The prospect of tighter restrictions on data center construction could complicate that which flourished under Republicans' emphasis on deregulation and growth.
Palihapitiya's research shows private investment in space hardware reached approximately $17 billion in 2025, up from $500 million in 2012. SpaceX, which completed its IPO in June, was itself down around 4% in Wednesday's premarket trading.
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