NEW YORK — The overwhelming victory by the Democrats in the midterm elections shook up Wall Street this week.
The biggest tremors were felt in shares of companies tied to the boom in artificial intelligence on concerns that a Democratic Congress will put the brakes on further development of data centers.
Defense and oil companies fell on expectations Democrats would push for an end to the U.S.-Iran war, which would likely lower energy prices.
Meanwhile, hospital shares rose on the possibility that funding for several government programs could be restored or boosted, while liquor companies and others buffeted by tariffs rose on hopes for relief.
Here’s a look at how certain stocks and industries reacted to the result of the midterms.
AI stocks
The frantic construction of data centers to power the AI boom has meant big profits for a wide array of companies — chip makers, power providers, cooling system producers, cloud computing companies and more. Investors hungry for a piece of those profits dove in, pushing some stocks up by double or more. But concerns grew that AI stocks got too pricey. And then the Democrats swept the midterms to take control of Congress.
Nvidia, Lam Research and others tied to the AI boom swung wildly this week on worries that Democratic victories in statehouses across the country could mean a slowdown in further construction, particularly in Texas. Hyperscalers, or those funding the buildout, like Amazon, fared better.
Defense
Defense companies have been volatile throughout the year, rising and falling with the shifts in the U.S. war with Iran. Hopes for an end to the war increased following the Democrats' sweep in the midterms. An end to the war could mean slimmer business for several big defense companies, though the war has also depleted stockpiles of weapons, which could result in demand for resupplies by the U.S. government.
Northrop Grumman, Lockheed Martin, RTX and General Dynamics fell between 4% and 12% after Tuesday.
Oil and refining companies
Oil exploration and refining companies have been among the biggest beneficiaries of the U.S. war with Iran, which has stifled global supplies since February and raised the price of crude oil and gasoline. Several big energy companies lost ground following the midterms because an end to the war would lower oil prices and reduce the companies' profits.
Companies such as Exxon Mobil and Phillips 66 are still showing solid year-to-date gains.
Elon Musk’s companies
Elon Musk spent more than $445 million in an attempt to help Republicans maintain control of Congress. Not only was his return on investment not very good, but shares of his two publicly traded companies took a drubbing on concerns a Democratic Congress will investigate Musk's work as Trump's cost-cutting chief in 2025. SpaceX, which houses Musk's xAI business, and Tesla, with plans for a fleet of mostly autonomous vehicles, fell 5% and 10.1%, respectively, after the midterms.
Trump Media
The president’s social media company, Trump Media & Technology, lost 33% of its market value in the three days after the election. Trump’s stake in the company was worth nearly $5 billion in March 2025. Now, it’s worth less than $600 million. The company is hoping to improve its fortunes by merging with the nuclear fusion company TAE Technologies. Completion of the deal is pending.
Power companies
Companies focusing on wind, solar and other forms of renewable energy could see sunnier days ahead with a more industry-friendly Congress. Democrats will have overwhelming influence on funding when they take control of Congress in January, raising hopes for a wide range of green energy companies.
Those companies involved in powering the data centers at the hub of the AI buildout didn't fare as well, however, after a number of data center skeptics got elected to Congress or governorships.
Hospitals
Hospitals gained ground over hopes that funding for several government programs could be restored or boosted, including Medicaid and subsidies for the Affordable Care Act. Medicaid spending was reduced under Trump. Enhanced tax credits for the ACA were allowed to expire without being renewed, resulting in a decline in enrollment for insurance coverage nationally. More funding for those programs would result in an eventual boost to healthcare providers, including hospitals.
HCA Healthcare rose 6.9%, Tenet Healthcare gained 6.2% and Universal Health Services added 10.4% after Tuesday.
Homebuilders and home improvement
The housing sector, including builders, continues to face pressure from historically high home prices and mortgage rates. The shift in power in Congress could mean a greater focus on policies that address affordability, which was a key theme for Democrats. Cutting tariffs and lowering energy costs could lower supply chain costs. That could also help home improvement retailers by relieving pressure on consumers.
Mortgage rates, though, are a trickier issue for the industry. The Federal Reserve is expected to raise its benchmark interest rate again in an effort to cool inflation. That likely means that interest rates on many types of loans, including mortgages, will remain high.
D.R. Horton gained 4.9%, PulteGroup rose 4.4% and Home Depot added 2.9%.
Alcohol
Beer, wine and liquor companies could see relief from tariffs that have hurt sales both in the U.S. and globally with Democrats taking control of Congress. The hope is that they will take action to end the global tariff conflict that has raised prices. S&P 500 members Constellation Brands, which has U.S. import rights for Corona and Modelo beers, and Brown-Forman, which makes Jack Daniel's and other liquors, both had gains.
Household goods
Makers and sellers of everyday consumer staples gained ground as investors moved out of riskier sectors. They were also helped by hopes that a shift in control of Congress could mean policies that help cool inflation. Eliminating or reducing tariffs could help lower costs for businesses. Ending the U.S. war with Iran could boost global oil supplies, which would lower oil prices and costs for shipping on everything from food to clothing.
After the election, Costco Wholesale added 3.4%, Procter & Gamble rose 2.1% and Dollar General rose 2.5%.