After the Democrats' midterm election victory, US data center stocks fell sharply while solar energy rose

The market reacted to the change in control of Congress

US data-center-related stocks fell sharply, while clean energy sector shares rose on Wednesday after Democrats won control of Congress in the midterm elections. According to Anadolu, investors saw two opposing trends in this outcome: the likelihood of closer congressional oversight of AI projects and, conversely, stronger federal support for renewable energy.

Data centers and utilities under pressure

Cipher Digital fell 21% in intraday trading, cloud provider CoreWeave lost 9.5%, and data center operator Applied Digital dropped 8.8%. An additional source of pressure was the prospect of congressional hearings on the electricity and water consumption of new data centers, which heightened concerns about how quickly companies will be able to see returns on their AI investments. Utilities tied to data center projects in Texas also declined: Vistra lost 15.4%, Constellation Energy 9.2%, and power equipment supplier GE Vernova 11.5%.

Big cloud companies and the solar sector rose

The largest cloud providers moved in the opposite direction: Amazon and Microsoft each gained 6%, while Alphabet added 4.6%. According to the outlet, the market's logic is that a slower pace of construction could raise the value of existing data centers and ease pressure on these companies to spend on new capacity. In the solar sector, Enphase Energy rose 8.8%, First Solar 8.4%, and Sunrun 6.9% on expectations of federal incentives for clean energy under a Democratic Congress.

Healthcare in the green, defense and Trump-linked companies in the red

Shares of hospital operators and health insurers also rose on expectations that Democrats will push to restore expanded Affordable Care Act subsidies and reverse some Medicaid cuts: HCA Healthcare gained 8.5%, Centene 7.3%, and Molina Healthcare 6.3%. Defense contractors fell as investors reassessed how much of the $1.5 trillion defense budget proposed by President Donald Trump could pass through Congress: Northrop Grumman lost 3.7%, while RTX, Lockheed Martin, and L3Harris Technologies fell between 3% and 6%. Companies tied to Trump and his ally Elon Musk also traded lower: Trump Media & Technology Group dropped 13%, while SpaceX and Tesla fell 3.5% and 3.3% respectively. Private prison operators GEO Group and CoreCivic lost 3.8% and 2.1% — they had previously risen after Trump's 2024 victory on expectations of growing demand for detention capacity as part of a tougher immigration policy.