The US midterm elections are turning into a key source of concern for a stock market riding high on the artificial intelligence trade. Polls and prediction markets show Democrats increasingly likely to gain control of at least one chamber of Congress, which could weigh on AI-related stocks with steep valuations. Brian Mulberry, chief market strategist at Zacks Investment Management, warned of more and louder hearings on AI safety if Democrats perform strongly.

Democratic senators have urged the president to strike an agreement with China to slow AI development, and Wolfe Research’s Tobin Marcus noted AI safety is becoming a more live subject for Congress in 2027. Strategists expect Democrats to create a Select Committee on AI to question executives and issue subpoenas. Bank of America’s Michael Hartnett warned a Democratic sweep could trigger a 10% decline in US stocks due to AI complex risks.

Barclays strategists Jenny Yang and Alex Altmann said scrutiny of AI infrastructure and data center buildout is a partly overlooked risk. Evercore ISI strategists led by Sarah Bianchi said the broadest market risk comes from investigations and hearings on big tech/AI, particularly around AI agents breaking containment or internal safety acknowledgments. Oracle Corp. shares fell up to 5.7% after moving to shield itself from data center project expenses amid opposition.

Despite these concerns, investors have brushed off regulation calls, with the Nasdaq 100 hitting a record and the Philadelphia Semiconductor Index rallying.