Tesla Inc. (TSLA) and Space Exploration Technologies Corp. (SPCX) shares declined in overnight trading as Republican Sen. Ted Cruz (R-Texas) and Florida Gov. Ron DeSantis (R) warned that Democrats could target Elon Musk's businesses following their sweeping midterm victories.

Cruz Warns Democrats Will Target Musk

Cruz warned in a lengthy analysis on Wednesday that Democrats would "persecute those they perceive to be enemies, especially Elon Musk," following their takeover of Congress and major victories in Texas.

Describing Republicans' defeat as a "blue tsunami," Cruz predicted investigations targeting President Donald Trump, his administration and business leaders. He also warned that Democratic policies could threaten investment in artificial intelligence infrastructure.

DeSantis Predicts Trouble For Musk In Texas

Speaking at a Wednesday press conference, DeSantis echoed Cruz's concerns, pointing to Texas' newly elected Democratic attorney general.

"They're going to go after Elon Musk. I guarantee you they will do that," DeSantis said. "Having the Gigafactory and all that there, I think it's gonna be problematic for him because I think the political hostility is very, very strong."

Democrat Nathan Johnson defeated Republican Mayes Middleton to become Texas' first Democratic attorney general since 1994, according to official election results. Johnson has emphasized consumer protection and anti-corruption enforcement, although neither he nor other Democratic leaders have announced investigations targeting Musk.

Texas Election Raises Fresh Business Concerns

Elsewhere, Democrat Gina Hinojosa's victory over Republican Gov. Greg Abbott has also raised concerns about AI data center development.

Reuters reported Wednesday that Musk's businesses could face increased scrutiny over government contracts and subsidies, while Hinojosa's proposed data center moratorium threatens expansion plans.

Musk previously floated space-based data centers as an alternative amid growing regulatory concerns.

The election fallout has already weighed on both companies' shares on Wednesday.

Price Action: TSLA shares fell 0.99% to $381.39, while SPCX declined 1.36% to $134.08 in after-hours trading at the time of writing, according to market data.