The Nasdaq-100 rose 1.14% to 28,500 on Wednesday after Democrats won control of both chambers of Congress, recovering from an overnight selloff that briefly pushed index futures down more than 2%. Major technology and artificial intelligence stocks, however, moved in opposite directions.

Investors were weighing the prospect of tighter AI regulation against expectations that a divided government could limit major policy changes. In practical terms, divided government means major legislation would need agreement across party lines — a structure that historically constrains sweeping policy changes while opening the door to congressional oversight of the executive branch. The conflicting moves also reflected uncertainty over what Democratic control of Congress could mean for technology companies that benefited from the Donald Trump administration’s approach to deregulation.

Software stocks led the rebound. Microsoft jumped 6.01% to $552.32, while Google parent Alphabet gained 4.63% to $292.99, according to intraday charts reviewed Wednesday. Hardware stocks moved lower, with AI chipmaker Nvidia falling 2.19% to $202.17, Tesla declining 3.61% to $384.10, and Intel losing 5.80% to $57.04. Meta also declined, although no percentage move was provided. The divergence underlined that AI exposure is not a monolith: companies supplying the sector’s physical infrastructure reacted to the election result differently from those distributing AI through software and online services.

Despite the declines, the source said none of the stocks had yet shown a heavy bearish trend. Nvidia was undergoing the clearest price correction, but its longer-term trend remained bullish as prices tested weak support near the $200 zone.

Bitcoin also recovered strongly after an initial election-related selloff. It traded at about $80,512, up 4.12% on the day, and moved back above $80,000.

According to Reuters, investors were particularly concerned about increased scrutiny of AI data centers, described as the hardware infrastructure supporting the AI industry, after Democratic victories in states including Texas and Georgia. Large infrastructure projects have become politically contentious in those states. Facilities of this kind require extensive land, electricity and cooling capacity — attributes that routinely place data center projects at the center of local land-use and regulatory debates. The AI sector was already facing questions about its enormous infrastructure spending and whether those investments would produce adequate returns.

Trump Media’s decline began before election night

Trump Media & Technology Group, the company behind Truth Social, was among Wednesday’s biggest decliners. Its shares plunged 14.29% to $5.10, extending a fall that had begun well before Democrats gained control of Congress. The stock had already lost approximately 55% of its value year to date before Tuesday’s vote.

Technical indicators showed that traders had been bearish on the stock for months. Trump Media has been in a technical pattern known as a “death cross” since March 2025 and has lost nearly 90% of its market capitalization since its 2024 cap. A death cross occurs when the average price over the previous 200 days rises above the average price over the previous 50 days, a signal associated with a rapid loss of value.

The Nasdaq-100’s recovery was positive for technology bulls, but the index remained well below its October highs above 31,000. The 28,000 area represented an immediate support zone, while a move above 29,000 would strengthen the short-term recovery.

Going forward, the political map offers concrete markers to watch: Democratic control of both chambers carries authority over committee agendas, a traditional avenue for hearings and oversight of AI and data center development, while the state-level contention over large projects in Texas and Georgia will show how far that scrutiny extends on the ground.

Bitcoin’s return above $80,000 provided another indication that risk appetite had not disappeared entirely. Still, the split between technology winners and losers showed that investors were becoming more selective about their exposure to the AI boom and the political risks surrounding it.

Source: Decrypt