Musk Waterloo: Tesla (TSLA.US) and SpaceX (SPCX.US) bucked the trend and plummeted, and AI monetization became the key after the midterm elections

According to Woofun AI, when the dust settled on the US midterm election results, Musk's Tesla (TSLA.US) and SpaceX (SPCX.US) faced rare market headwinds and lost significantly in the general market rally, highlighting the double squeeze of changes in the political landscape and AI capital expenditure anxiety on overvalued technology assets.

On November 4, EST, as the results of the US midterm elections gradually became clear, the three major US stock indices collectively closed higher, and market sentiment seemed optimistic. According to BiyaPay, the Dow Jones Industrial Average rose 3.03%, the S&P 500 rose 1.58%, and the NASDAQ rose 1.44%.

However, Tesla closed the day at $385.19, down 3.34%; SpaceX closed at $135.92, down 3.81%. As of 19:59 p.m. that evening, some after-hours quotes showed that the prices of the two companies fell further back to $381.30 and $134.01.

This fragmentation has caused the market to re-examine a question: What changes will Musk's business landscape face after the US midterm elections?

Previously, Musk actively participated in US political activities and supported Republican candidates. As the Democratic Party made significant progress in this election, the congressional power pattern changed, and the market began to pay attention to new variables that may appear in government supervision, AI data center construction, and enterprise project approval.

However, it is not comprehensive to simply attribute this round of decline to a “failure of Musk's political bet.” What is really worth analyzing is whether changes in the political environment will affect business operations, and whether Tesla and SpaceX's AI business, which was previously highly anticipated by the market, can be converted into revenue and cash flow as expected.

Judging from the market performance on November 4, the rise in the US stock market does not mean that all technology companies will strengthen at the same time. On the same day, large technology platforms and some consumer and defense stocks performed relatively well, but data center-related companies and some technology supply chain companies were under varying degrees of pressure. Instead of simply buying the entire technology sector, the capital is reevaluating the growth expectations and policy risks of different companies. The weak performance of Tesla and SpaceX on the day was also related to this market sentiment. Although the two companies are involved in electric vehicles, commercial space, and satellite internet respectively, they have both developed more links with AI infrastructure and Musk's overall commercial layout in recent years.

Tesla is promoting autonomous driving, robotaxi, and humanoid robot businesses; SpaceX continues to expand investment in the Starlink network, commercial space, and AI computing infrastructure. These businesses have long-term growth potential, but they also require continued capital investment. Actual development depends on technological progress, project approval, and speed of commercialization. As a result, the market is not only concerned about the current revenue and profits of the two companies, but also whether future growth can be realized. As investors begin to worry about changes in the regulatory environment, a slowdown in project progress, or an increase in capital expenditure, the company's valuation may come under pressure ahead of time. This also means that the November 4 decline is more like a reassessment of the market's expectations for future growth, and does not mean that the fundamentals of the two companies have fundamentally reversed.

Tesla's stock price logic is no longer just about traditional car sales. The automotive business is still an important foundation for the company's operations, but autonomous driving, Robotaxi, Optimus humanoid robots, and energy businesses have become an inescapable part of the market when discussing its long-term valuation. The problem is that the commercialization progress and profit model of these businesses are not exactly the same. The automobile business has relatively clear delivery volume, sales price, gross margin, and inventory data, and investors can judge the operating situation through quarterly financial reports. However, the autonomous driving and robotics business still requires more technical verification, practical applications, and large-scale operation data. Taking Robotaxi as an example, the market is concerned not only about whether vehicles can achieve autonomous driving, but also about the scope of services, operational efficiency, accident liability, maintenance costs, and users' willingness to pay. Even if technology advances, it will take some time to generate stable income. The same goes for Optimus robots. Product presentations and technical demonstrations can increase market attention, but ultimately whether commercialization can be achieved in manufacturing, logistics and other scenarios also depends on mass production capacity, unit cost, and actual customer needs.

Another factor that cannot be ignored is capital expenditure, according to data compiled by Woofun AI. Tesla's third-quarter earnings report predicts that capital expenditure in 2026 will exceed 20 billion US dollars. This figure has been lowered from the previous “more than 25 billion US dollars” guideline, and the funds will be used for computing infrastructure, data centers, production facilities, and R&D. This shows that the company is investing more resources into AI and automation businesses, but it also means investors need to focus on the time gap between investment and return.

If the commercialization of the new business is in line with expectations, continued investment may open up new growth space for the company; if technology verification or market expansion is slower than expected, capital expenditure may increase capital pressure over a period of time. Therefore, if we look at Tesla next, we need not only to see whether the stock price rebounds, but also to track changes in car delivery, gross profit margin, energy business performance, commercialization progress of autonomous driving, and capital expenditure.

Compared to Tesla, SpaceX's business structure is more diverse. Commercial space and launch services are an important part of its business, and Starlink satellite internet provides a growing number of connectivity services. At the same time, the company is expanding AI-related business and computing infrastructure investments in an attempt to combine satellite networks, computing power, and AI services. Judging from the latest results, SpaceX's growth is more than what the market imagined. SpaceX's third-quarter revenue reached approximately US$14.58 billion, up 161% year on year, higher than analysts' expectations; net profit was about US$4.4 billion, the first quarterly profit since the company went public, and a net loss of approximately US$1.1 billion for the same period last year. The company's revenue growth was mainly driven by the expansion of the AI business and the growth of Starlink connectivity services.

Judging from the business structure, the AI-related super-intelligent business has become an important source of growth, and connectivity services such as Starlink have also provided the company with revenue and operating profit support. But rapid revenue growth doesn't mean future expansion is without costs. SpaceX's third-quarter capital expenditure was approximately $19.593 billion, of which AI-related capital expenditure accounted for a large proportion. Capital expenditure is an investment used to build and purchase long-term assets. It is not equivalent to current operating expenses, let alone directly use it to reduce revenue to determine whether a company is losing money. What really needs attention is whether these investments can be converted into sustainable income and cash flow in a timely manner. AI data center construction requires multiple resources such as computing chips, servers, electricity, cooling systems, and sites. Once the equipment is deployed, customer orders and continued use are also required to gradually generate returns.

If there is a delay in construction progress, chip supply, or power supply, capital has already been invested, but the payment of revenue may be delayed. This is why, after the Democratic Party makes progress in the election, the market will re-evaluate the policy environment facing AI infrastructure projects in the US. Data center construction involves energy consumption, land use, community impact, and environmental regulation. If local governments put forward stricter approval requirements for new projects, the construction cycle and operating costs of relevant enterprises may be affected.

However, the increase in regulatory requirements does not mean that the project will come to a standstill. SpaceX still has different businesses such as commercial aerospace and Starlink, and the operating value of other businesses cannot be ignored because AI infrastructure faces policy uncertainty.

There is also a notable contrast in this round of market: SpaceX stock prices have declined, yet some institutions are raising their long-term growth forecasts for the company. Morgan Stanley (MS.US) analyst Adam Jonas recently raised SpaceX's 2027 revenue estimate by 93% to US$175 billion, raised the 2028 revenue estimate by 84% to US$290 billion, raised the 2027 operating profit estimate by 72% to US$119 billion, and advanced the expected time for the company's positive free cash flow from 2035 to 2031, or four years ahead; at the same time, the estimated debt issuance scale was lowered by about US$280 billion. The bank gave a buy rating and a target price of $300, which is higher than Wall Street's average target price of about $256.

This adjustment is mainly based on growth expectations for the company's AI business, satellite connectivity services, and commercial space business. What needs to be distinguished, however, is that institutional predictions are not the operating results that the company has already achieved. The fact that free cash flow is ahead of schedule does not mean that SpaceX can now fully rely on its own cash flow to support all future expansions. Institutional models are often adjusted based on factors such as revenue growth, profit margins, capital expenditure, and financing requirements. As soon as one of these key assumptions changes, future valuations may be adjusted accordingly. This is why institutional increases and short-term stock declines can occur simultaneously. Investors may acknowledge SpaceX's long-term business space, but are still concerned about the short-term regulatory environment, AI infrastructure investments, and payback cycles. For companies whose valuations already include many future growth expectations, the market will tend to pay more attention to the progress of fulfillment. Therefore, judging SpaceX's subsequent trend, it is necessary not only to look at the target price given by the agency, but also to observe whether AI business revenue continues to grow, whether Starlink user and service revenue expands, and whether capital expenditure can gradually be transformed into stable operating returns.

In addition to elections and AI infrastructure, the potential integration between Tesla and SpaceX has also been the focus of recent market attention. Both companies are closely related to Musk's commercial landscape, and there is also some room for collaborative imagination in business. For example, AI computing power, energy supply, automation technology, and infrastructure construction may all become entry points for external discussions on potential integration. It should be emphasized, however, that discussions on a potential merger do not mean that the deal has already been finalized. For investors, the value of the merger depends not only on how large the two companies' businesses are combined, but also on the transaction structure, share exchange ratio, asset valuation, and future capital requirements.

If the transaction involves issuing new shares, the shareholding ratio of the original shareholders may change; if there are differences in the capital expenditure and debt structure of different businesses, it is also necessary to consider how to allocate resources after the merger. Technology collaboration may indeed bring long-term value, but ultimately it also needs to be reflected in indicators such as operating efficiency, customer growth, profit margins, and earnings per share. Investors should not treat potential collaborations as realized benefits in advance until the terms of the transaction have been clarified. For Tesla and SpaceX, future stock price performance still needs to return to their respective operating conditions and valuation bases.

After experiencing the decline on November 4, the next thing the market needs to observe is not only whether the two stocks can rebound, but whether there have been any new changes in corporate fundamentals and the external environment. First, whether policy changes actually affect enterprise projects. The US midterm elections changed the congressional power pattern, but policy adjustments require subsequent legislation, supervision, and specific implementation procedures. For Tesla, it is necessary to observe autonomous driving, automobile supervision and related project approval; for SpaceX, attention should be paid to AI data center construction, energy support, and government project environments. The election results alone cannot be used to determine that a company has lost a business opportunity. Second, can the AI business continue to deliver revenue. Tesla needed to prove long-term growth expectations with actual progress in the autonomous driving, Robotaxi, and robotics businesses; SpaceX needed to look at AI business revenue, Starlink connectivity services, and operational efficiency of computing infrastructure.

If the new business continues to expand and gradually forms stable profits, the market's long-term valuation of the company may receive more support. Conversely, if capital expenditure continues to rise but revenue and cash flow growth do not keep up, valuation pressure is likely to continue. Third, can the stock price regain the support of trading volume and fundamentals. In the short term, we can observe the previous lows of Tesla and SpaceX, changes in trading volume, and the degree of financial participation during the rebound.

If the stock price rebounds but the trading volume is insufficient, it means that market confidence may still be limited; if volume recovers the key price area, it is possible to further observe whether there is a sustained recovery. The US tech giants rose collectively, but Tesla and SpaceX bucked the trend and fell. This market split reflects not only the changes in political sentiment brought about by the US midterm elections. For Tesla, the market is waiting for autonomous driving, robotics, and energy businesses to further meet growth expectations; for SpaceX, the rapid expansion of the AI business has brought new revenue space, while also putting forward higher capital expenses and capital recovery requirements. The long-term development of Musk's companies still has notable business support, but whether future valuations can be maintained will ultimately depend on technological progress, project approval, profitability, and cash flow performance. For US stock investors, what is really worth tracking is not the rise or fall of a certain day, but rather whether the operating data continues to be fulfilled behind market expectations.