Tuesday’s Democratic takeover of both chambers of Congress sent shockwaves through technology markets, with AI-adjacent stocks bearing the brunt of overnight selling pressure.
Democrats flipped seven Republican-held Senate seats across North Carolina, Ohio, Iowa, Maine, Kansas, South Carolina, and Texas, with contests in Mississippi and Alaska still unresolved as of Wednesday morning.
Fundstrat co-founder and Bitmine Immersion Technologies (NASDAQ: BMNR) Chairman Tom Lee argued on CNBC that the selloff in the hardest-hit corners of tech could soon reverse course dramatically.
Lee identified memory, semiconductors, data centers, and neocloud operators as the subsectors most likely to stage sharp recoveries once markets fully digest the election outcome.
“I think the stocks that got hit the hardest into the midterm elections — which are memory, semis, data centers and neoclouds — I think these are going to see the biggest bounces,” Lee told CNBC Wednesday morning.
He drew a pointed parallel to election night in 2016, when equity futures plunged after Donald Trump’s presidential victory before markets staged a powerful rally once regular trading began the following session.
“If we go back to 2016, the night President Trump won the White House, the futures overnight were down sharply, but then the market rallied strongly the day the market opened,” Lee said, adding, “I think that’s what we’re going to see.”
Beyond historical precedent, Lee flagged another potential catalyst: investors who had built bearish positions in technology stocks ahead of the vote would likely be forced to buy back shares, amplifying any upward move through short covering.
Despite Lee’s bullish thesis, pre-market trading on Wednesday showed a divided picture, with CoreWeave (CRWV) down 2.8% and IREN (IREN) falling 3.2%, while Nebius Group (NBIS) bucked the trend with a 1.7% gain.
Broader futures pointed to a firmer open, with S&P 500 contracts up roughly 54 points, Dow Jones futures ahead by about 534 points, and Nasdaq futures gaining approximately 150 points.
Large-cap technology names were mostly higher in pre-market trade, with Amazon (AMZN) up 3.2%, Meta Platforms (META) gaining 2.2%, Alphabet (GOOGL) advancing 1.7%, and Apple (AAPL) adding 0.9%.
Companies closely tied to Elon Musk faced heavier selling, with SpaceX (SPCX) off 4.7% and Tesla (TSLA) declining around 3%, reflecting Musk’s prominent role backing Republican candidates during the campaign.
Oracle (ORCL), which has committed significant resources to building large-scale AI data centers, also traded down 1.8% before the open despite its less partisan profile.
Lee acknowledged that anxiety about the technology sector had been building as economic inequality and AI-related risks moved toward the center of political debate ahead of Tuesday’s vote.
Rather than viewing a Democratic Congress as a threat to the industry, Lee suggested it could provide an opportunity for the sector to address longstanding concerns, noting that “tech has done well under both administrations.”
“I don’t think this is an ‘AI is going to grind to a halt’ situation,” Lee said. “I think this is really a chance to reshape AI in ways that there are some of the dangers that we’ve known about that we can actually start to address.”
