Shares of Elon Musk’s SpaceX and Tesla extended their losses on Thursday as investors reassessed the outlook for AI infrastructure, data-center development and Musk’s broader corporate strategy following the U.S. midterm elections. The companies are on track to lose more than $380 billion in combined market value this week, according to the Reuters report, highlighting the sensitivity of Musk’s businesses to political and infrastructure developments.

Texas Election Results Raise Data-Center Concerns

The latest pressure on SpaceX and Tesla follows Democratic victories in Texas, where Democrats won the races for Senate, governor and attorney general on Tuesday. The results have raised expectations that Musk’s businesses could face greater regulatory scrutiny in the state.

The political shift is particularly relevant to SpaceX because the company has increasingly leaned into the AI data-center boom. Texas has become an important location for large-scale data-center development, making the state’s future permitting and regulatory environment significant for companies seeking to expand computing infrastructure.

For investors, the election results introduce an additional layer of uncertainty around the timing and execution of infrastructure projects. Any tougher oversight could affect development schedules, although the source does not specify what particular restrictions Texas officials may ultimately pursue.

SpaceX’s AI Strategy Faces a New Policy Test

SpaceX’s growing involvement in AI data centers has linked its financial outlook more closely to the broader expansion of artificial intelligence infrastructure. Data-center projects require substantial capital and depend on access to land, electricity and regulatory approvals.

The potential for tighter oversight therefore creates a strategic question for SpaceX as it expands beyond its traditional space business. While the source indicates that the company has leaned into the data-center boom, it does not provide specific details on the financial contribution of those operations or the effect that potential Texas restrictions could have on its results.

The broader political environment could nevertheless become increasingly important as U.S. states assess the economic and infrastructure consequences of rapid AI-related development.

Potential Merger Adds Another Layer of Uncertainty

Investors are also assessing Musk’s statement that special committees at SpaceX and Tesla are exploring a potential merger. The development introduces another significant strategic consideration as both companies face pressure in public markets.

No completed transaction has been announced, and the source does not provide details on a proposed structure, valuation or timetable. The fact that committees are exploring the possibility, however, adds to the range of issues investors are considering alongside the companies’ share-price declines and changing regulatory environment.

Musk’s Political Exposure Becomes More Significant

Musk had spent heavily to support Republicans during the midterm elections, making the Democratic victories in Texas particularly relevant to his businesses. The results could increase scrutiny of companies associated with Musk at a time when their valuations are already under pressure.

Going forward, investors will be watching Texas regulatory decisions, data-center permitting and the outcome of the merger discussions. The interaction between political oversight and AI infrastructure expansion could become increasingly important for SpaceX, while Tesla’s exposure to the broader Musk corporate strategy may keep the two companies closely linked in market sentiment.