How the Midterms Moved the Market: Winners and Losers by Sector

Democrats won control of both the House and the Senate in the November 3 midterm elections, leaving President Donald Trump facing a divided Congress for the rest of his term. The result also reshaped Texas, where Democrat Gina Hinojosa defeated Governor Greg Abbott after campaigning on a pause in new data-center approvals.

Wall Street’s first reaction was positive. On November 4, the S&P 500 rose 1.72%, the Nasdaq gained 1.77% and the Dow climbed 2.97%, as investors expected a divided government to limit major policy changes. Beneath the rally, however, data-center builders, Texas power producers, Elon Musk’s companies and Trump Media sold off, and on November 5 the selling spread across AI stocks, sending the Nasdaq Composite down 5.52%, its steepest one-day drop in about 19 months.

In this article, we look at which sectors and companies moved the most after the election, with a focus on Texas and the data-center trade.

Texas Turns Blue

Texas saw the biggest political shift of the night. Hinojosa won the governor’s race with about 5.23 million votes to Abbott’s 4.52 million. Democrats also won the races for lieutenant governor, attorney general and comptroller, flipped the Texas House, and Democrat James Talarico won the U.S. Senate race over Republican Ken Paxton. Republicans kept control of the state Senate.

The result matters for markets because Texas is one of the largest data-center construction markets in the country. Hinojosa has said she would issue a moratorium on data-center approvals until the Legislature adopts new protections, and she has called for ending data-center tax breaks and for large data-center customers to pay for their own transmission lines, substations and water infrastructure. Lieutenant governor-elect Vikki Goodwin has backed a similar construction pause, while comptroller-elect Sarah Eckhardt has said she wants to review the state’s tax exemptions for AI data centers.

Texas was already tightening its approach before the election. Earlier this year, Abbott directed state regulators to audit data centers seeking to connect to the main Texas grid, pausing new approvals while the reviews take place. Hinojosa takes office on January 19, 2027.

Data Center and AI Infrastructure

Companies that build and lease AI computing capacity saw the steepest declines, as many have projects in Texas or depend on fast access to new power.

• Hut 8 ($HUT), a digital-infrastructure company that develops power-intensive data-center sites, fell about 24% on November 4.
• IREN ($IREN), an AI cloud and data-center operator, dropped about 11% on November 4 and about 17% on November 5.
• CoreWeave ($CRWV), an AI cloud provider that has contracted 262 megawatts of capacity at Core Scientific’s campus in Denton, Texas, fell about 10% on November 4 and another 10% on November 5.
• Nebius Group ($NBIS), an AI infrastructure provider, fell about 7% on November 4 and about 5% on November 5.
• Applied Digital ($APLD) and Cipher ($CIFR), which develop high-performance computing data centers, each fell more than 14% on November 5.

Semiconductor Sector

Chipmakers were among the hardest hit on November 5. Nvidia ($NVDA) closed down about 9%, its largest one-day decline since January 2025, while AMD ($AMD) fell about 17%. Micron ($MU) and Marvell ($MRVL) each dropped more than 16%, and the broader semiconductor index fell roughly 7%.

AMD’s decline came two days after the company reported third-quarter revenue of $13.4 billion, up 45% from a year earlier, with data-center revenue up 97% to $8.55 billion. Qualcomm ($QCOM) also fell sharply after issuing a weaker outlook, adding company-specific pressure to the sector. UBS strategists estimate that about 30% of expected U.S. data-center capacity additions in 2028 could face delays from pauses in several states.

Power Producers and Texas Utilities

Independent power producers that had rallied on expectations of fast-growing electricity demand from data centers fell sharply on November 4, a day the broader market rose. Vistra ($VST) fell 13.8%, NRG Energy ($NRG) dropped 13.5%, Talen Energy ($TLN) lost 8.5% and Constellation Energy ($CEG) declined 6.7%. Vistra and NRG both operate large generation fleets on the Texas grid, and KeyBanc downgraded Vistra citing its Texas exposure ahead of the company’s November 6 earnings report.

Texas transmission utilities are also in focus because their spending plans are tied to large new power customers. AEP ($AEP) has said its Texas unit holds agreements tied to roughly 49 gigawatts of potential new load by 2031, while Oncor, which is 80.25% owned by Sempra ($SRE) through Oncor Holdings, has reported about 293 gigawatts of data-center connection requests.

Tesla and SpaceX

Elon Musk’s companies were among the biggest losers of the week. Musk was the largest individual donor of the election cycle, spending at least $474 million to support Republican candidates, including about $224 million in Texas. Both Tesla and SpaceX are headquartered in Texas, and Paxton, whom Musk backed heavily in the Senate race, lost to Talarico.

Tesla ($TSLA) fell 3.3% and SpaceX ($SPCX) dropped 3.8% on November 4, even as the broader market rallied. SpaceX’s decline that day was partly cushioned by the announcement of a multiyear deal with Qualcomm to build the ground network for Starlink Mobile, its planned wireless service. The selling accelerated on November 5, with Tesla down about 11% and SpaceX about 9%.

Over the two sessions, Tesla fell about 14% and SpaceX about 13%, a combined loss of roughly $456 billion in market value, and SpaceX shares slipped below their $135 IPO price for the first time since August. The selloff came amid concerns that a Democratic-led Congress could investigate Musk’s 2025 role leading Trump’s cost-cutting effort. SpaceX, which also houses Musk’s AI company xAI, is additionally exposed to the data-center selloff.

Trump Media

Trump Media & Technology Group ($DJT), the parent company of Truth Social, sank 15.9% on November 4 and lost about 33% of its market value in the three days after the election.

Cloud and Hyperscaler Stocks

The largest cloud providers, which all operate data-center facilities in Texas, saw smaller declines than the specialized AI infrastructure names. Oracle ($ORCL) fell about 4% after the Texas result, and during the November 5 selloff Microsoft ($MSFT) was down about 3.4% and Alphabet ($GOOGL) about 2.9% in intraday trading. Hyperscalers such as Amazon ($AMZN) fared better than the companies building and powering their data centers.

Defense and Oil

Defense stocks fell on expectations that Democrats would push for an end to the U.S.-Iran war. On November 4, Lockheed Martin ($LMT) fell 6.9%, Northrop Grumman ($NOC) dropped 4.4% and General Dynamics ($GD) lost 2.3%. In the days after the election, Northrop Grumman, Lockheed Martin, RTX ($RTX) and General Dynamics were down between 4% and 12%.

Oil and refining companies, including Exxon Mobil ($XOM) and Phillips 66 ($PSX), also lost ground on expectations that an end to the war would lower oil prices.

Sectors That Moved Higher

Not every sector fell. Investors moved into areas that could benefit from Democratic priorities on healthcare, affordability and tariffs.

• Hospitals: HCA Healthcare ($HCA) rose 6.9%, Tenet Healthcare ($THC) gained 6.2% and Universal Health Services ($UHS) added 10.4% on hopes that Medicaid and Affordable Care Act funding could be restored or increased.
• Homebuilders and home improvement: D.R. Horton ($DHI) rose 4.9%, PulteGroup ($PHM) gained 4.4% and Home Depot ($HD) added 2.9% on expectations of policies focused on affordability, tariff cuts and lower energy costs.
• Consumer staples: Costco ($COST) rose 3.4%, Dollar General ($DG) gained 2.5% and Procter & Gamble ($PG) added 2.1% as investors moved out of riskier sectors.
• Alcohol: Constellation Brands ($STZ) and Brown-Forman ($BF.B) gained on hopes that Democrats would act to ease the global tariff conflict.
• Solar: Solar companies also climbed on November 4, on expectations of a more renewable-friendly Congress.

What Comes Next

The new Congress takes office in January, and several Texas dates are on the calendar. A state report on data-center subsidies, ownership, grid use and water consumption is due on December 10, the Texas Legislature begins its regular session on January 12, 2027, and Hinojosa is sworn in one week later.

Because Republicans still control the Texas Senate, a long-term moratorium or changes to the data-center sales-tax exemption would require legislation, not just action by the governor. The state’s data-center program abated $617.6 million in taxes in fiscal 2025.

This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. BBAE has no position in any investment mentioned.