Who Will Succeed Nvidia as the Next 'Victim' After the Democrats Take Control of Both Houses?

Original | Odaily Planet Daily ( @OdailyChina )

*Author | Wenser ( @wenser2010 )*

Nvidia's market value evaporated by $500 billion in just five days, and this clearly won't be the last "victim" after the Democrats won a majority in Congress.

In early November, the results of the U.S. midterm elections were announced. As expected, the Republican Party lost control of both houses, and the Democrats achieved a significant victory, securing a majority in Congress.

After the election results were announced, tech stocks, AI stocks, energy stocks, and other sectors fell again, except for a brief and slight rebound. Coupled with the U.S. earnings season, the upcoming IPO of Anthropic, and the extramarital affair scandal involving Nvidia founder Jensen Huang, markets including U.S. stocks, gold, crypto assets, and oil have all been affected, generally shrouded in a cloud of decline.

This is just the beginning; the transmission of political changes to the capital and crypto markets is still spreading. Within the foreseeable future, more assets will face bearish shocks. Odaily Planet Daily will attempt to analyze the potential bearish sectors and targets following the Democrats' control of Congress for readers' reference (Note: The following content does not constitute investment advice).

After the Democrats Become the Majority Party in Congress: How Will It Affect the Capital Markets?

First, it should be noted that the new Congress, controlled by the Democrats as the majority party, has not yet officially taken office. There are still about 50 days until their official inauguration on January 3, 2027. Currently, the White House is still under the control of President Trump, whose second term ends on January 20, 2029.

However, unlike the previous situation where the Republican Party held the initiative as the majority party, after the Democrats become the majority, the power center for legislation, appointments, investigations, and regulation will gradually shift to them; Trump will only have presidential veto power, military power, foreign affairs power, and the power of pardon.

Additionally, the Democrats have previously emphasized that they will initiate investigations into Trump family crypto projects; hearings and subpoenas are also powerful tools for the Democrats, which is one of the main challenges Huang is currently facing. Understanding the "tools" of the Democrats allows us to roughly infer the main sectors and specific targets that will be affected subsequently.

AI Data Centers and Cloud Providers: Facing Direct Impact

According to previous midterm election polls and voting results, Americans are extremely dissatisfied with the impact of AI data centers and cloud providers on employment and life, which is also one of the important directions for the Democrats to rally their voter base.

Goldman Sachs previously estimated that after the Democrats take office, about 45% of the states that will tighten data center construction regulations account for the 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 in 2027 and 2028, such as CoreWeave, Nebius, IREN, Cipher Mining (CIFR), MARA Holdings (MARA), Galaxy Digital (GLXY), Riot Platforms (RIOT), and other crypto mining transformation companies will face a series of issues such as project delays and rising costs.

With losses come gains; Rich Privorotsky, head of European equity trading at Goldman Sachs, believes that if future computing power expansion is restricted, the value of existing computing power that has already been built and put into operation will rise accordingly. In theory, this is beneficial for large-scale cloud providers like Meta (META), Amazon (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) that have already deployed a large amount of computing power; however, they may also face strict regulations and investigations.

Of course, considering the impact on the upstream and downstream of the industry chain, the bearish impact 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 the scope of impact.

Energy-Related Targets: Under Continuous Pressure

Apart from the reduced demand for electricity and other energy from data centers and cloud providers, after the Democrats take control of both houses, they may influence Trump's foreign war decisions from legislative and fiscal perspectives, greatly easing the U.S.-Iran conflict situation.

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

Additionally, one of the historical points of contention between the Republican and Democratic parties, namely clean energy subsidies and related legislation, may also face a tide of 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 Stalled

It is foreseeable that as a non-crypto-friendly party, the Democrats' rise in both houses of Congress will inevitably mean that crypto concept stocks will face severe tests and stricter regulations. The previously highly anticipated CLARITY Act is also likely to face a standstill, and it cannot be ruled out that it will be confirmed as unable to pass.

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

Moreover, crypto mining companies, including Hut8 and Bitdeer, as well as crypto projects related to the Trump family, such as the publicly listed company ALT5 Sigma (ALTS), may also face a wave of concentrated elimination. The Trump Media Group (DJT), which is closely associated with Trump, is also within the "range" of Democratic investigators.

Additionally, for prediction market platforms aspiring to go public, such as Kalshi, which is valued at hundreds of billions of dollars, the Democrats' high-pressure regulatory policies on crypto will inevitably not allow them to grow peacefully, and their long-standing regulatory disputes and legal rulings with various states in the U.S. may also face certain pressures.

Of course, the Democrats taking office is not entirely negative; they also have certain positive stimuli regarding tariff control, price suppression, and consumption stimulation, and related targets are expected to usher in 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.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.