The US midterm elections have handed Elon Musk and the data center industry a serious setback, according to analysis from TechCrunch's Equity podcast published on November 7, 2026. Democrats won a historic victory, and in dozens of local ballot measures across the country, voters rejected data centers or passed restrictions and moratoriums on them.
The result matters beyond US politics because data centers are the physical backbone of the AI boom. With Democrats now in power and politicians who campaigned against data center expansion taking office, tech companies face what TechCrunch describes as a consensus view in the tech world: more roadblocks ahead, especially in states like Texas.
Musk's half-billion dollar bet falls flat
On the Equity podcast, Sean O'Kane pointed out that Elon Musk, one of the biggest data center builders, was also the largest donor to the Republican Party, giving half a billion dollars or possibly more. O'Kane said Musk seems to have gotten "basically nothing" from that donation, and his companies are now headquartered in a state that has "remarkably, turned about as blue as it could possibly turn."
That state is Texas, where governor-elect Gina Hinojosa defeated Greg Abbott after campaigning openly on restricting data centers. TechCrunch notes that Texas has long been a friendly home for Musk's businesses, making the political shift a notable turn for the world's richest man and his companies.
Data centers become a grassroots political issue
Kirsten Korosec said on the podcast that data centers were probably not the main cause of the "blue wave," but they have become an increasingly grassroots issue. She pointed to how hyperscalers and companies have pursued approvals: very secretively, often requiring non-disclosure agreements from elected or appointed officials, and not sharing information about the scale of projects in environmentally sensitive areas, including the water-scarce Southwest.
Korosec said Republicans, independents and Democrats alike saw this as wrong and were motivated by it, even if it was not the single deciding issue. Anthony Ha added that anti-AI and especially anti-data center sentiment appeared to be a potent political force in the results.
OpenAI shifts its data center playbook
The tech industry had argued that AI companies could not operate under different rules, but Korosec said that stance is already changing. She noted that OpenAI suddenly said it can change its policies, releasing what it calls a compute campus policy blueprint.
