The 2026 US midterm elections have reshaped the political scene, with the Democratic Party securing control of both the House and the Senate. This shift in power is expected to impact various industries and companies, creating winners and losers in the business world.
The cost of living was a central issue for voters, with gas prices driving up expenses. Rep. Hakeem Jeffries, the likely next Speaker of the House, pledged to address these concerns, stating, “We will fight hard to lower the high cost of housing and groceries and gas.”
Affordability and the Democratic Victory
In contrast, President Donald Trump acknowledged that voters were not willing to pay more for gas, stating, “I don’t think it’s the war, I think it’s the gas prices.” This sentiment may have contributed to the Democratic Party’s success in the elections.
Elon Musk’s Political Investments
Elon Musk, the mega-donor and CEO of Tesla and SpaceX, spent over $400 million supporting Republican-aligned groups in the midterms. His largest investment was in Ken Paxton’s Senate campaign in Texas, where Musk-backed groups spent approximately $212 million.
Despite Musk’s efforts, Democratic lawmaker James Talarico defeated Paxton, helping the Democrats secure control of the Senate. Musk also used his social media platform, X, to endorse Republican candidates, particularly in Texas, where he has relocated his companies for more favorable tax and corporate legal policies. Notably, Tesla moved its corporate headquarters to Austin in 2021, while Tesla and SpaceX both reincorporated in Texas in 2024, reflecting Musk’s strategic decision to base his companies in the state.
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AI Companies and Increased Scrutiny
The Democratic victory may lead to increased scrutiny of AI companies, including their power consumption, water usage, and impact on household electricity bills. Companies like Microsoft, Google, Amazon, and Meta could face more investigations and oversight.
However, the potential for bipartisan agreement on AI-related issues, such as national security and economic growth, may temper any crackdown on the industry.
The election results initially caused a dip in US stock futures, with the S&P 500 and Nasdaq 100 both experiencing declines. However, the trend reversed after markets opened, with the S&P 500 and Nasdaq indices both rising. In morning trading, the S&P 500 was up about 1.5%, while the Nasdaq index was up about 2.1%. SpaceX and Tesla, both of which have AI businesses, were each down about 2.5% in morning trading, although they pared some of their steeper premarket declines.
Implications for Trump’s Policies
The Democratic control of Congress may also impact President Trump’s proposed $5,000 “dividend” for Americans. Trump made this promise conditional on Republicans retaining control of both chambers, which did not occur. As the president cannot unilaterally spend more than $1 trillion on nationwide checks, Democratic control makes this proposal even less likely to be realized.
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