Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser 2010 )

NVIDIA's market value evaporated by $500 billion in five days, and this is obviously not the last "victim" after the Democratic Party won the congressional majority.

In early November, the results of the U.S. midterm elections were announced. As expected, the Republican Party lost control of both houses, while the Democratic Party achieved a major victory and secured the majority of seats in Congress.

After the election results were announced, aside from a brief minor rebound, sectors including technology stocks, AI stocks, and energy stocks continued to decline. Coupled with the U.S. stock earnings season, the impending IPO of Anthropic, and the extramarital affair scandal involving NVIDIA founder Jensen Huang, U.S. stocks, gold, crypto assets, oil, and other markets were unable to remain unaffected, generally overshadowed by a cloud of decline.

This is only the beginning; the transmission of political changes to the capital markets and crypto markets is still spreading. Within the foreseeable range, more assets will face bearish impacts in the future. Odaily Planet Daily will attempt to extrapolate the potential bearish sectors and targets after the Democratic Party takes control of Congress for readers' reference (Note: the following content does not constitute investment advice).

After the Democratic Party becomes the majority party in both houses of Congress: How will it affect the capital markets?

First, it should be noted that the new Congress, controlled by the Democratic Party as the majority party, has not officially taken office yet, with about 50 days remaining until its official inauguration on January 3, 2027; at present, it is still President Trump who holds the decision-making power, with his second term ending on January 20, 2029.

However, unlike the previous majority party status held by the Republicans, after the Democratic Party becomes the majority, the focus of power in legislation, appointments, investigations, and regulation will gradually shift to the latter; Trump will only retain powers such as presidential veto, military authority, foreign affairs authority, and the power of pardon.

Additionally, the Democratic Party has previously emphasized initiating investigations into Trump's family's crypto projects; hearings and subpoenas are also powerful tools for the Democrats, which is one of the main challenges Jensen Huang has faced recently. Understanding the "tools" of the Democrats allows us to infer the main sectors and specific targets that will likely be influenced in the future.

AI Data Centers and Cloud Providers: Facing Direct Impact

According to previous midterm election polls and voting results, Americans are very dissatisfied with how AI data centers and cloud providers affect employment and daily life, making this an important direction for the Democrats to court voters.

Goldman Sachs previously estimated that after the Democrats take office, about 45% of the states tightening regulations on data center construction will affect planned capacity in the U.S., with Texas alone accounting for about a quarter. As a result, NVIDIA (NVDA), Broadcom (AVGO), and all companies planning to build new data centers with growth projected in 2027 and 2028, like CoreWeave, Nebius, IREN, Cipher Mining (CIFR), MARA Holdings (MARA), Galaxy Digital (GLXY), and Riot Platforms (RIOT) will face project delays and rising costs.

Every loss corresponds with a gain; Rich Privorotsky, head of European equity trading at Goldman Sachs, believes that if future computing power expansion is restricted, the value of the existing operational computing power will rise accordingly. Theoretically, this is beneficial for large-scale cloud providers like Meta (META), Amazon (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) that have already deployed substantial computing power; however, they could also be subject to strict regulations and investigations.

Of course, considering the upstream and downstream impacts on the industry chain, the bearish effects on AI data centers and cloud providers will further transmit to chip, memory, cooling, power equipment manufacturers, and energy service providers. Companies like AMD, SMCI (Supermicro), MRVL (Marvell), NVDA (NVIDIA), MU (Micron), SNDK (SanDisk), SKHY (SK Hynix), INTC (Intel), and CBRS (Cerebras) are also within this sphere of influence.

Energy-Related Targets: Under Continuous Pressure

Aside from the decreased demand for electricity and other energy from data centers and cloud providers, the Democratic Party's control of both the House and Senate may also influence Trump's foreign war decisions through legislation and fiscal means, significantly easing the U.S.-Iran conflict situation.

As a result, oil-related commodities (such as CL, BRENT OIL, WTI) have experienced varying degrees of decline, while oil stocks such as ExxonMobil, Chevron, Shell, ConocoPhillips, and Occidental Petroleum may also continue to be under pressure.

Furthermore, one of the long-standing contentious issues between the Republicans and Democrats—clean energy subsidies and related legislation—may also face a retreat, potentially affecting new energy vehicle companies like Tesla (TSLA). Last week, Trump expressed support for the Energy Project Approval Reform Act, but faced opposition from some Democratic lawmakers and environmental organizations.

Crypto Concept Stocks: Legislative Progress Facing Difficulties

It is predictable that as a non-crypto-friendly party, the Democratic Party's gaining influence in both houses of Congress will inevitably mean that crypto concept stocks will face severe tests and more stringent regulations. The previously anticipated CLARITY Act is also likely to face stalling and there is a possibility it will not pass.

As a result, crypto concept stocks such as Coinbase (COIN), MicroStrategy (MSTR), Circle (CRCL), and Robinhood (HOOD) will face a series of substantial bearish impacts. In addition to tightening investigations and legislation, major crypto companies may also face the "subpoena stick" from Democratic officials.

Moreover, crypto mining companies like Hut8 and Bitdeer, as well as publicly listed companies in ALT5 Sigma (ALTS) associated with Trump's family's crypto projects, might also face a wave of concentrated removal and elimination. The Trump Media Group (DJT), closely linked to Trump, is also within the "range" of Democratic investigators.

Additionally, for prediction market platforms aspiring to go public, like Kalshi, valued at several billion dollars, the Democratic Party's high-pressure regulatory policies on crypto will certainly not allow it to grow peacefully, and its long-standing regulatory disputes and legal determinations with various local states in the U.S. may also face certain pressures.

Of course, the Democratic Party's assumption of office is not entirely negative; it might also provide certain positive stimuli for tariff control, price suppression, and consumer stimulation, with related targets expected to welcome a new round of increases. For example:

• Consumer stocks: Walmart (WMT), Costco (COST), Procter & Gamble (PG), Coca-Cola (KO);
• Healthcare stocks: Merck (MRK), Eli Lilly (LLY), Johnson & Johnson (JNJ), UnitedHealth (UNH);
• Defense and security stocks: Palantir (PLTR) etc.

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