Deutsche Bank's newest research report argues that despite widespread worries about political risk facing SpaceX after the midterm elections, the company overall sits in a relatively firm position — there is limited room for congressional interference in its core business, and a potential tightening of AI computing-power regulation could even push the company's revenue higher in the opposite direction. At the same time, the bank notes that the policy stance of Texas's incoming governor, the commercialization progress of orbital data centers, and the regulatory path of a potential merger between SpaceX and Tesla Motors (NASDAQ: TSLA) remain several variables that need continued tracking.

According to a November 6 report by Deutsche Bank analyst Edison Yu, the bank systematically reviewed the political risks SpaceX faces after the midterm elections. The report notes that Musk provided substantial financial support to the Republican Party, which sparked market concerns about political retaliation risk, but this concern is largely overstated.

The report also flags that the incoming Texas governor's tough remarks on data centers are currently the most noteworthy near-term risk point. If Texas imposes stricter scrutiny on AI data centers, SpaceX's pace of computing-power expansion in the state may slow and costs may rise, but the expected impact on overall company estimates before 2027 is limited.

The report maintains a Buy rating on SpaceX with a target price of $250, while the stock closed at $123.62 on November 5.

Limited room for congressional interference, core contracts hard to replace

The report points out that SpaceX's rocket launch and satellite communications contracts are signed with federal executive agencies, including NASA and the Space Force, and Congress has extremely limited direct channels to interfere with these contracts.

More critically, in many business areas there is currently no viable alternative supplier on the market. Citing the use of Starshield in Ukraine as an example, the report notes that if Congress tried to cut related budgets, the ultimate damage could be to U.S. interests rather than to SpaceX.

In the AI computing-power field, the report mentions a rumored computing-power cooperation agreement between the government and SpaceX, with the counterpart being the U.S. Department of War (DoW).

In addition, the report notes that if SpaceX and Tesla seek a merger, Congress has no authority to block it directly, because antitrust matters fall under the Federal Trade Commission (FTC) and the Department of Justice (DOJ), though congressional hearing procedures could cause some delay in the merger process.

The new Texas governor's remarks are the most direct near-term variable

Deutsche Bank lists the incoming Texas governor's policy stance as currently the most materially influential political risk. In a CNN interview, the incoming governor clearly stated:

"Texas has always been a pro-business state, but what changes when I am governor is that this must be a partnership that benefits Texans... Data centers have entered most rural communities without any rules and laws to protect Texans... We need to stop action on data centers before we establish these protections... I don't hate data centers, I hate the way they take advantage of Texas, and that will stop when I am governor."

Deutsche Bank believes this statement is more likely to lead to stricter review of data center projects in Texas rather than an outright ban. The report expects that the vast majority of SpaceX's computing power in 2027 will be deployed outside Texas (at a scale of 8 to 10 gigawatts), so the near-term impact on company estimates is small. But expansion plans for 2028 and beyond face uncertainty, and areas where SpaceX is actively positioning itself, such as Louisiana, may become alternative options.

On the cost side, Deutsche Bank warns that if Texas's regulatory environment tightens, SpaceX's construction cost for new computing power in the state could exceed $35 per watt.

Tighter computing-power supply may paradoxically benefit SpaceX revenue

At the same time, Deutsche Bank raises a noteworthy reverse logic in the report: if Texas policy causes overall U.S. computing-power expansion to slow markedly, SpaceX may instead benefit.

The report notes that SpaceX has already demonstrated the ability to build computing power faster and at lower cost than competitors. Its neocloud contracts with customers include a 90-day cancellation clause, which allows the company to flexibly capture upside when spot market prices rise sharply.

Deutsche Bank believes that if overall industry computing-power supply is constrained, SpaceX has the ability to raise pricing substantially over the next several years, thereby driving revenue and EBITDA higher while capital expenditure falls. The report describes this scenario as a "peculiar dynamic" — company fundamentals improve, but investors may therefore assign it a lower "AI valuation multiple."

Regarding Texas policy uncertainty, Musk recently said publicly: "Data centers in space now look quite attractive." This remark brought orbital data centers (ODC) back into the market's view.

Deutsche Bank points out that investors are generally skeptical about the commercial viability of orbital data centers. The report argues that the rapid reusability of Starship, along with large-scale domestic production of solar panels and radiators, will be key to unlocking the economics of orbital data centers. Deutsche Bank's base case forecasts that by the end of 2029, orbital data center deployment could reach 500 megawatts.

On the rocket launch business side, Deutsche Bank notes that licensing and public safety regulation for commercial space launches are federal responsibilities, mainly handled by the Federal Aviation Administration (FAA), and the Texas governor cannot interfere directly.

But the report also warns that the governor could create friction for the expansion of Starbase through land-use rights, state-level permits, adjustments to incentive policies, and possible future legislative changes to beach closure rules, making expansion more difficult.