Technology analyst Dan Ives said Elon Musk needs to make political overtures to Texas officials to protect SpaceX’s ambitions for AI data centers after Democrats won the midterm elections. According to Sina Finance, Ives said on Anthony Pompliano’s podcast, The Pomp Podcast, that Texas remains central to SpaceX’s infrastructure strategy and Musk cannot simply move the construction work to Florida.

After Gina Hinojosa won the Texas governor’s race, scrutiny of new data centers increased. Hinojosa has called for pausing project approvals until stronger protections for electricity, water and communities are in place, while also saying she is open to working with Musk’s companies.

Ives previously warned that Democratic gains in the midterm elections could slow the “AI revolution,” particularly in Texas. Last week, reports said the Democratic victory had raised questions about SpaceX’s expansion plans and a possible merger with Tesla. Ives said he still believes SpaceX will acquire Tesla, while noting that political changes could bring additional regulatory hurdles and that SpaceX’s valuation includes a 20% to 25% discount for political risk.

After Hinojosa’s win, Musk joked that orbital data centers had become especially attractive. Ives said that option was still years away and that the immediate focus was building in Texas. He said Musk would join negotiations, which would take time, and that both sides had strong reasons to reach an agreement.