These five types of stocks could rebound after the US midterm elections, analysts say
Democrats won the U.S. midterm elections this week, which could be a boon for several groups of stocks, Wall Street analysts say. On Tuesday, Democrats flipped seven Senate seats and more than 40 House seats, giving the left-wing party majority representation in Congress. That means Democrats will have more say over legislative priorities on Capitol Hill — a power that has big implications for businesses and their actions. Stocks were volatile in the trading sessions following Election Day. The S&P 500 ended the week down 2.7%. Tech stocks were particularly hard hit, with the Nasdaq Composite falling 3.4% over the same period. The 30-stock Dow Jones Industrial Average fared better, sliding just 0.9% during the week. However, Wall Street has identified a few potential winners amid this disaffection. A blue tsunami could bolster U.S. solar, airline and healthcare stocks, among others, several analysts said in notes to clients. Here are some actions they put forward. Drone Stocks With more Democrats in office soon, drone manufacturers and drone battery makers are likely to see their stocks increase, according to William Blair. The investment firm noted that Democrats have stated their intention to provide more support to Ukraine in its war against Russia, which could lead to a flow of additional money to companies that make drones and the parts that power them. AMPX 3M Mountain Amprius Technologies Stock Over the Past Three Months One such company that stands to benefit is drone battery maker Amprius Technologies, according to William Blair. According to the investment firm, about 50% of the company’s revenue has been directly tied to Ukraine or allies supporting the effort in 2026. “We view Amprius as a winner in the midterms as the ‘blue wave’ brings more support to Ukraine, an important driver of demand for Amprius,” analyst Mark Shooter said Friday. “The mid-term outcome could reverse the U.S. position from decreasing to increasing funding to Ukraine, reducing demand risks related to this conflict, and proposing an expansion of Amprius revenues in 2027.” Shooter has an Outperform rating on Amprius. The stock is down more than 22% over the past three months, but added 1.5% this week. Clean Energy Companies Renewable energy companies, which produce energy via solar, wind or hydropower, could get a boost after the midterm elections, according to several industry analysts. “More modest political winds are possible: Congress is still considering a permitting reform bill…(which has) been reported to benefit clean energy and geothermal,” Tobin Marcus, an analyst at Wolfe Research, said Thursday. “And some new governors are proposing renewable mandates for data center power.” FSLR 3M Mountain First Solar’s performance over the past three months One stock that stands out is First Solar, according to William Blair. “Democrats have won the midterm elections, winning both houses of Congress and flipping five governorships in Texas, Georgia, Ohio, Iowa and Nevada, as of this writing,” analyst Jed Dorsheimer wrote in a note to clients Thursday. “Ultimately, we believe this will unlock support at the local level for larger-scale solar energy supply and siting.” The bipartisan U.S. Affordability and Jobs Act, which aims to speed federal permitting for solar projects and expand grid development, is likely to become law with Democrats in power, the analyst added. Dorsheimer upgraded First Solar to outperform market performance. Shares of the solar panel maker are up 15% over the past week, although the stock is down 23% so far in 2026. Health care stocks are also poised to benefit from Democrats’ gains in Congress. Making medical care accessible is a major goal of the political party’s platform, which bodes well for some health care industry values, according to Wolfe Research. “Presumptive Speaker Jeffries has explicitly stated that (lawmakers’) ‘First 100 Hours’ agenda will include full repeal of Medicaid cuts…and restoration of expanded tax credits (Affordable Care Act) that expired at the end of 2025,” Marcus de Wolfe wrote Thursday. “So it makes perfect sense for investors to focus on healthcare after the blue wave.” The analyst noted that the potential tailwinds could be greatest for hospitals, although it could take “some time” for them to materialize. Shares of hospital operators HCA Healthcare and Universal Health Services have jumped 4.6% and 11.1%, respectively, since the start of this week. More generally, healthcare stocks have surged recently. The Vanguard Health Care Index Fund ETF (VHT) has soared more than 10% over the past three months as investors have shifted away from technology stocks and toward more defensive plays due to credit risks related to the ongoing development of artificial intelligence. Airline Stocks Airline stocks could rebound after a big blue sweep this election season, according to Citigroup. “Investors…may be overlooking the effect that a dramatic increase in consumer confidence among Democrats following the midterm elections could have on demand for discretionary consumption, such as air travel,” Citigroup analyst John Godyn said in a note to clients Wednesday. “As long as Republican consumer confidence doesn’t collapse in a 1:1 ratio to an improvement in Democratic consumer confidence (and implicitly assuming that Democrats and Republicans travel about the same per capita), one could argue that the midterm elections could give airlines a boost in demand.” The US Global Jets ETF (JETS), which invests in US and international airlines, is up about 2% since Election Day. Delta Air Lines and United Airlines led gains among airlines last week, jumping 8.8% and 8.2%, respectively. Specialist REITs A few specialist real estate investment trusts are likely to recover, according to Barclays. “Voters largely favored candidates and ballot measures that oppose data center development…(which) could slow the pace of construction industry-wide,” analyst Brendan Lynch said in a note to clients Wednesday. “We view our coverage as a net beneficiary of the pricing power that construction limitations will create.” Lynch cited Equinix, Iron Mountain and Digital Realty Trust as three potential beneficiaries of the change. “Our sense is that the EQIX and IRM pipelines are essentially fully approved, and that DLR faces only limited permitting risk for projects that would begin years away,” the analyst wrote. These three REITs have fallen between 4% and 13% over the past three months, largely due to rising interest rates that have diminished the appeal of some dividends and lowered property valuations. However, the pullback offers a good opportunity to recover shares, according to Barclays.
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jack colman
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