Midterms Shake Up AI Stock Market Winners and Losers as Democrats Gain Control of Both Chambers

In brief

• Democratic control of both US congressional chambers has raised investor concern about slower AI-related data center construction.
• Global stock markets fell on the election news, with the Ibex following Wall Street lower.
• UBS expects higher volatility to become the new normal, favoring firms with strong balance sheets and diversified AI exposure.

Investors Weigh the Political Shift

Democrats won control of both chambers of Congress in the US midterm elections, a setback for President Donald Trump. Investors have since moved to price in how the new balance of power could affect the artificial intelligence sector, which has driven much of the recent rally in technology shares (La ola azul pone en cuarentena el auge de la IA en los mercados y añade volatilidad – EL PAÍS) (Las bolsas caen ante el temor por la consecuencia de las victorias demócratas para el auge de la IA – Expansión).

Data Centers at the Center of the Debate

The build-out of data centers, which are essential to AI, became a contested issue for voters in several states. Democrats won key states with a campaign that targeted the rapid expansion of these facilities. Markets now fear that tighter oversight or permitting delays could slow the infrastructure spending that technology companies have committed to.

Global Selloff and Sector Rotation

World stock markets fell on Wednesday, with investors concerned that the Democratic sweep could hurt growth in infrastructure tied to AI. Expansión reported that early portfolio adjustments after the vote already point to clear winners and losers across equities, fixed income, Asian markets, currencies, commodities and crypto assets (Ganadores y perdedores en los mercados con el cambio político en EEUU – Expansión). In Madrid, the Ibex followed Wall Street lower (El Ibex replica las dudas de Wall Street – Expansión).

Analysts Expect Higher Volatility

UBS said greater volatility could become the new normal, a development it expects to favor platforms and infrastructure providers with strong balance sheets, along with diversified exposure across the AI value chain. Earlier market previews had already flagged the midterms as a potential turning point for stocks, alongside the conflict in Iran, inflation and Nvidia's results (Los resultados de las 'midterms' pueden dar un vuelco a la Bolsa – Expansión) (Claves para ganar en Bolsa en un noviembre de alto voltaje – Expansión) (Cómo reaccionará el mercado a las ‘midterm’ – Expansión).