Investors are grappling with a fresh crash in AI stocks. The selloff has come as a surprise, as many were expecting markets to continue rising following the Democrats' victory in the midterm elections. Instead, some of the biggest technology and AI stocks are falling sharply, raising fresh concerns that the AI bubble may finally be bursting.
What History Says
Stocks have been higher one year after every midterm vote since 1946, including all four times both chambers flipped to the party opposing the president, Truist Advisory Services strategist Keith Lerner said, according to a Bloomberg report. UBS Global Wealth Management chief investment officer Mark Haefele expects more volatility in the near term, especially in tech, but he does not think the result changes the medium-term outlook enough to justify a shift in portfolios, he wrote in a note.
Healthcare Looks Like the Biggest Winner
Democrats now have more room to restore the enhanced Affordable Care Act subsidies and roll back parts of the Republican Medicaid cuts, including work requirements. Investors in Medicaid-focused health insurers are likely to welcome the sweep, Morgan Stanley said. We recently ranked the healthcare stocks with the most upside according to analysts, and the list mentions the post-midterm rally. Click to see the 10 picks .
Analysts Disagree on AI and Tech
Wedbush's Dan Ives said Democratic control of the Senate will create major hurdles for AI and tech legislation over the next two years. JPMorgan traders said fears about Texas data centers were overblown because a change in control would most likely mean new regulation while the building continues. They added that they are not yet ready to call it an all clear for the AI trade. Goldman Sachs strategists said a Democratic Congress might limit data center tax incentives, and a national moratorium looks unlikely under any election outcome. Our list of the 10 best stocks to buy for the next 10 years is ranked by hedge fund ownership and includes AI leaders like Nvidia, Broadcom and Microsoft. Read the full ranking here .
Defense and Clean Energy
Democratic control could limit growth in defense spending after inflation without a broader deal that also covers healthcare, Wells Fargo Investment Institute said . The firm still calls the industry's earnings outlook stable to modestly positive. Clean energy shares jumped in premarket trading on Wednesday, with First Solar (NASDAQ:FSLR) up 9.4%, Reuters reported . Hedge funds own several clean energy names heavily, and we ranked them by the number of holders. Check which stocks lead the list .
Below, we look at the top stocks to buy after the Democratic victory. You can see click to read the full list of the 10 Best Stocks to Buy After Democrats' Midterm Election Victory.
Methodology
To make this list, we scanned financial publications and brokerage analyst notes published before and after the 2026 midterm elections. We picked 5 stocks that analysts believe are poised to benefit from Democrats' victory in Congress. We ranked the stocks by market cap, from the smallest at number 5 to the largest at number 1. We also mentioned each company's market cap as of November 4, and the analyst views and news reports behind each pick.
You can click the image below to see the stocks list:
5. First Solar, Inc. (NASDAQ: FSLR)
Market Capitalization as of November 4: $20.91 Billion
First Solar is poised to benefit from a strong Democratic presence in Congress because of expectations for continued federal support for clean-energy development. Following Democrats' victory in both chambers of Congress, Barclays analysts led by Peter Crampton said the election outcome could reduce the risk of further political interference with renewable-energy incentives and improve protections for long-term solar investments.
First Solar, which manufactures solar modules and has significant production operations in the United States, could benefit if lawmakers preserve incentives supporting domestic solar manufacturing and renewable-energy projects. However, the company's outlook remains sensitive to solar demand, financing costs, trade policies and the eventual outcome of negotiations between Congress and the Trump administration. Interest rates are pressuring First Solar even though its margins and backlog are strong, Ariel Global Fund said in its third-quarter 2026 letter. See what the fund said
4. Tenet Healthcare Corporation (NYSE: THC)
Market Capitalization as of November 4: $23.26 Billion
Jefferies identified Tenet Healthcare among hospital operators with potential near-term upside from the midterm elections, according to Bloomberg's October 30 report. The brokerage suggested that Democratic gains could create opportunities to delay Medicaid payment reductions included in President Donald Trump's tax legislation.
Wolfe Research's head of US policy and politics, Tobin Marcus, similarly argued that hospitals could benefit if Democrats secure healthcare funding concessions during future debt-ceiling negotiations. Following the Democratic victory, Bernstein analysts said delays to Medicaid-related provisions could ease expected hospital enrollment losses and potentially prevent reductions to state-directed payments, according to Reuters on November 4.
Tenet operates hospitals and ambulatory surgery centers, and a more favorable Medicaid funding environment could help protect reimbursement levels and patient coverage. Tenet's growing ambulatory business is another reason investors have been watching the stock. Click to see the analysis
3. Centene Corporation (NYSE: CNC)
Market Capitalization as of November 4: $37.63 Billion
JPMorgan included Centene among its preferred stocks under a Democratic sweep scenario, according to an October 5 report published by Stocktwits and Yahoo Finance. The bank argued that Medicaid-focused insurers could benefit if Democratic lawmakers negotiate delays or modifications to planned healthcare spending reductions. Jefferies also identified Centene as a potential beneficiary of renewed negotiations over enhanced Affordable Care Act subsidies, according to Bloomberg's October 30 report.
Following the election, Bernstein analyst Lance Wilkes named Centene among the insurers most directly positioned to benefit from the Democratic victory. Wilkes expected the election outcome to encourage negotiations over Medicaid funding and ACA subsidies, potentially supporting enrollment and improving the mix of insured members. Centene operates Medicaid managed care plans and Affordable Care Act marketplace insurance products, making its business particularly sensitive to government healthcare funding and enrollment policies.
Oakmark Select Fund said in its second-quarter 2026 letter that Centene rallied on strong results and is a leader in government-managed care. See the fund's view here
2. HCA Healthcare, Inc. (NYSE: HCA)
Market Capitalization as of November 4: $106.68 Billion
Jefferies identified HCA Healthcare among hospital stocks with potential near-term upside from Democratic gains in Congress, according to an October 30 Bloomberg report. The investment thesis centered on expectations that Democrats could negotiate changes to Medicaid spending reductions included in President Donald Trump's tax and spending legislation. Following Democrats' victory in both chambers of Congress, Bernstein analyst Lance Wilkes specifically identified HCA as a potential beneficiary of healthcare policy changes. Bernstein expected the election outcome to create opportunities for negotiations that could delay Medicaid-related provisions and prevent certain planned reductions to state-directed hospital payments.
Wolfe Research's Tobin Marcus also argued that hospitals could benefit from healthcare funding concessions during future debt-ceiling negotiations. HCA, one of the largest hospital operators in the United States, could benefit if lawmakers preserve Medicaid coverage and reimbursement levels. The stock rallied after the election results.
However, JPMorgan cautioned that major healthcare policy changes remain difficult because President Trump retains veto power over legislation passed by Congress. Right Tail Capital said in its second-quarter 2026 letter that it has built a position in HCA. Read why it likes the stock
1. NextEra Energy, Inc. (NYSE: NEE)
Market Capitalization as of November 4: $185.51 Billion
JPMorgan included NextEra Energy in its basket of stocks that could benefit from a Democratic sweep of Congress, according to a media report early October. The bank said renewable-energy utilities could benefit from greater support for clean-energy development, higher funding for relevant federal programs and a more favorable policy environment. NextEra, which operates regulated electric utilities and develops renewable-energy projects, could benefit from greater certainty surrounding clean-power investments. Reuters also identified the company as a potential beneficiary of a strong Democratic showing in a November 2 report.
Following the election, Barclays analysts led by Peter Crampton said the outcome could reduce risks to existing renewable-energy incentives and provide greater protection for long-term solar, wind and battery-storage investments. Guinness Sustainable Energy Fund pointed to uncertainty around NextEra's proposed acquisition in its third-quarter 2026 letter. Check what the fund flagged
Click to continue reading and see the expanded list of the 10 Best Stocks to Buy After Democrats' Midterm Election Victory .
While we acknowledge the risk and potential of NEE as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than NEE that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock .
Disclosure: None. This article was originally published at Insider Monkey.
