Midterm Elections One Month Out May Threaten AI-Linked Tech Stocks, Citi Warns

With U.S. midterm elections roughly one month away, Citi warns the outcome could pressure AI-linked stocks and several other sectors. In a research note published Tuesday night, U.S. equity strategist Scott Chronert said the elections likely will have "little impact" on S&P 500 fundamentals regardless of the result, but a Democratic sweep of both chambers could shift sector performance. Under that scenario, insurers, medical device makers and pharmaceutical stocks could outperform on expectations Democrats restore lost healthcare coverage. Chip investors "prefer Republican control, likely tied to AI legislative risk," Chronert said, though President Trump retains veto power over any AI regulation Congress advances. Some Democrats have proposed tighter AI oversight ahead of the vote. Trump has rejected calls to slow the technology, saying the U.S. must advance AI faster than China. Inflation, the economy and the Iran war also weigh on voters. Prediction market Polymarket priced a roughly 66% chance of Democrats winning both the House and Senate as of Wednesday.