The Democrats swept Congress and the U.S. stock market was reshuffled! AI stocks plunged more than 23%, but "such stocks" soared

The U.S. Democratic Party regained control of the House and Senate in the mid-term elections. U.S. stocks saw significant sector rotation on Wednesday (4th). Investors re-evaluated the prospects for artificial intelligence (AI) data center regulation, government spending and medical policy. Funds were withdrawn from data centers, defense contractors and Trump concept stocks, and turned to large cloud companies, clean energy and medical stocks.

The report pointed out that AI data center operators have become the focus of selling pressure, and related power and equipment stocks have also been under pressure simultaneously, while Trump-related assets have also been sold off. As for the winners, clean energy stocks were favored by market buyers, and medical stocks became another winner; among them, Centene surged 12.64%, HCA Healthcare surged 10.34%, Universal Health Services surged 10.88%, and Molina Healthcare surged 8.89%.

AI data center companies have become the focus of selling pressure. Hut 8 fell 23.23%, Cipher Digital fell 19.95%, Galaxy Digital fell 16.99%, and CoreWeave, IREN and Core Scientific also fell close to or more than 10%.

The market is paying attention to the flipping of Texas' political map. Governor-elect Gina Hinojosa has advocated suspending the construction of data centers until regulations related to community participation, residents' electricity bills and tax incentives are established. SemiAnalysis estimates that Texas will account for nearly 30% of the new data center power capacity in the United States in 2028. If approvals are delayed or construction costs increase, it may have an impact on businesses that are highly dependent on financing for expansion.

Related power and equipment stocks were under pressure simultaneously, with GE Vernova falling 9.33%, Constellation Energy falling 6.71%, and Vistra falling 13.81%. In comparison, large cloud companies bucked the trend and rose, with Microsoft rising 6.68%, Amazon rising 6.12%, and Alphabet rising 3.18%. The market believes that if the supply of new data centers slows down, the scarcity value of existing facilities may increase, and the capital expenditure pressure on technology giants may also be reduced.

Trump-related assets were also sold off, with the Trump Media and Technology Group plunging 24.54% and Tesla falling 3.34%. Defense stocks also generally weakened, with Lockheed Martin falling 6.92%, L3Harris falling 6.41%, and Northrop Grumman falling 4.53%. The market is re-evaluating Trump's $1.5 trillion defense budget, fearing that after the Democrats take control of Congress, the budget size and passage time will face more negotiations.

On the other hand, clean energy stocks were favored by buyers. First Solar rose 4.63%, Enphase Energy rose 3.71%, and NextEra Energy surged 4.89%, reflecting the market's expectation that the Democratic Party will increase its support for clean energy policies.

Medical stocks became another big winner, with HCA Healthcare soaring 10.34%, Universal Health Services rising 10.88%, Centene rising 12.64%, and Molina Healthcare rising 8.89%. The market is paying attention to policies such as premium subsidies and Medicaid employment requirements under the Affordable Care Act, but Morgan Stanley believes that the possibility of major medical policy changes before the next presidential election is still low.