Good morning!
Democrats took the House and the Senate overnight, and the first place investors looked was Texas data centers. Add AMD's blowout quarter, Meta's $15 billion bond, CVS planning to split itself up, and a fridge hack across Europe. Let's get into it.
📊 MARKETS
Stocks went into Election Day on a small bounce. The overnight swings are the real story.
Nasdaq: 25,372 ↑0.83%
S&P 500: 7,569 ↑0.36%
Dow: 51,787 ↓0.38%
10-Year Treasury: about 4.95%
Bitcoin: dipped overnight as results came in, then recovered nearly all of it
Tuesday was a chip rebound. Nvidia rose 2.3%, Micron 2.6%, and the S&P 500 snapped a three-day losing streak. Apple fell 1.9% and dragged the Dow. Then the results rolled in. Nasdaq-100 futures fell as much as 2.4%, Japan's Nikkei dropped over 4% at one point, and by early Wednesday US futures were slightly positive again. Gold is up about 3% to roughly $4,040 an ounce. Nobody really knows what a Democratic Congress means for stocks yet, and the market is saying so with these swings.
🗳️ DEMOCRATS WIN THE HOUSE AND THE SENATE
It wasn't close. NBC projects Democrats flipped seven Senate seats, including Texas, Ohio, Iowa, Maine, North Carolina and South Carolina, and will hold at least 258 House seats. They also flipped governor's mansions in Texas, Georgia, Ohio and Iowa.
Exit polls showed Trump's disapproval at 62%. Prices, corruption and the AI data center build-out were the big themes. Trump's picks got hit hard: Ken Paxton lost to James Talarico in Texas, Sherrod Brown beat Jon Husted in Ohio, and Roy Cooper beat Michael Whatley in North Carolina.
The mid-decade redistricting push mostly flopped too. Plenty of the redrawn seats still went blue.
Trump's reaction was calmer than people expected. He told the Wall Street Journal "we'll work with the Democrats," and didn't contest the results.
My take: Divided government usually means nothing big gets passed, and markets tend to like that. History is on the bulls' side too. The S&P 500 has gone up after each of the last 11 midterms. But this one comes with a loud anti-billionaire message, and tech is the obvious target.
🏗️ TEXAS JUST BECAME THE AI TRADE'S BIGGEST RISK
This is the part I'd watch. Gina Hinojosa beat three-term governor Greg Abbott in Texas, and she ran on a moratorium on new data centers until the state writes tougher rules. The legislature is still Republican, so she can't just flip a switch.
Texas holds roughly 27% of US data center capacity, by Wells Fargo's estimate, and it's projected to pass Virginia as the biggest market by 2030. In a CNBC voter poll, 56% said data centers were a major factor in their vote.
The money lost: Elon Musk put more than $200 million into stopping Talarico and lost. SpaceX and Tesla were each down around 5% before the open. CoreWeave dropped 3.6%.
Who gained: Solar and renewables ripped. First Solar jumped 8.5% and Plug Power over 10%. Health insurers and hospital stocks rose too. Defense names and prison operators fell.
House Democrats are already talking about hauling AI CEOs in to testify under oath. The incoming oversight chair's message to them was "lawyer up."
Where I land: AI stocks were already sliding on worries about slowing data center spending. Now there's a political reason to slow it down. If you're building anything that depends on cheap compute, watch what happens in Austin.
💻 AMD SAYS THE DEMAND IS STILL THERE
Good timing for the AI bulls. AMD reported revenue of $13.38 billion, up 45% from a year ago, against $13.09 billion expected. Adjusted earnings came in at $2.09 a share versus $1.95 expected. The stock jumped about 8% after hours.
Data center is now 64% of its business, up from 47% a year ago, and revenue there nearly doubled. CEO Lisa Su said she expects server revenue to double again in 2027. Fourth-quarter guidance is about $17 billion versus $16.2 billion expected.
The catch: The PC and gaming side is weak. That segment fell 8% to $3.7 billion, and gaming revenue dropped 40%. Memory costs are squeezing everyone who makes consumer hardware.
Super Micro and Arista also jumped after hours on strong guidance. The sell-off in chips was about fear of overspending, and so far the earnings reports keep saying demand is fine.
💸 META BORROWED $15 BILLION AND INVESTORS STILL LINED UP
Meta sold $15 billion of bonds in five parts, and investors put in about $58 billion of orders. That's nearly four times the offering. It came just days after S&P moved Meta's outlook to negative, citing the AI spending.
The price is the interesting part. The 30-year bond priced about 2.2 points over Treasuries, roughly 0.9 points more than a similar bond in April. Meta is paying a lot more to borrow than it did six months ago, and buyers still showed up. A first euro bond sale opened today.
This comes days after Meta laid out a possible equity raise of nearly $100 billion. A company that used to fund everything from cash now needs debt and equity both.
The bigger story: Big Tech has quietly turned into a heavy borrower. That works while the AI story holds. If it cracks, a lot of that debt gets a lot harder to carry.
💊 CVS IS BREAKING ITSELF IN TWO
CVS Health plans to split into two public companies in the first half of 2028, the Wall Street Journal reported, quoting the company. CEO David Joyner said, "We're basically taking what I believe is one great company and making it two."
One company keeps the CVS Health name and holds Aetna, the Caremark pharmacy benefit business, Oak Street and Signify. The other, CVS Pharmacy, gets the roughly 9,000 drugstores, mail-order and MinuteClinic. The drugstores bring in about a third of the group's $417 billion in revenue, according to the FT.
It unwinds the $78 billion Aetna deal from 2018. Political pressure on pharmacy benefit managers is a big part of the reason. The stock rose slightly after hours, and the company reports earnings today.
My take: The "one company that does everything" idea is dying in healthcare, same as it did in media. Retail pharmacy is a low-margin grind, and insurance is a different business. Splitting them lets each one be valued on its own.
🧊 HACKERS COOKED SUPERMARKET FRIDGES ACROSS EUROPE
Early Monday, attackers remotely switched fridges and freezers into defrost mode at supermarkets in seven to ten countries, depending on whose count you read. Temperatures hit up to 122°F (50°C) in some units. About 40 Delhaize stores in Belgium and Luxembourg were hit, and Carrefour, Ikea, Coop, ICA and others reported problems.
It's the same playbook as an attack on hundreds of French supermarkets three weeks ago. Danfoss, the Danish maker of the refrigeration controls, said its products were involved both times. Most of the affected systems were older units that no longer get security updates.
Nobody has claimed it, and no authority has confirmed the two waves are linked. Stores are now rushing to patch and disconnect systems from the internet.
Why it matters: Nobody stole data here. They just spoiled food, at scale, using cheap internet-connected controllers. Boring infrastructure is the soft target, and every old device that never gets patched is a free weapon.
🌍 A FEW OTHER THINGS ON THE RADAR
Novo Nordisk: Third-quarter sales of 79.2 billion Danish kroner ($11.9 billion) beat estimates, helped by its Wegovy pill, and it raised its outlook. Shares jumped as much as 6%.
Gold and silver: Gold is up about 3% to roughly $4,043 an ounce and silver is up over 4% near $52 as traders react to the sweep and a weaker dollar.
Dollar and yields: The dollar index slid to a one-month low near 101.3, and the 10-year yield eased slightly Wednesday morning.
Workplace engagement: Gallup says US employee engagement fell to 29% in Q3, the lowest since 2011. The sharpest drops were among hybrid and remote workers at companies rolling out AI.
Asia: Japan's Nikkei closed down 1.42% after falling more than 4% earlier, with SoftBank and chip equipment makers taking the hits. South Korea's Kospi and China's CSI 300 finished higher.
On "watch what happens in Austin": two things already in motion don't wait for January. Abbott's own September 21 letter told TCEQ to issue no permits for data center projects until the ERCOT and water board audits finish, and Cipher said on its November 2 call that it expects final classifications in December, after the audit. So some of this gets settled while he's still governor.
The money is still going in, and it shows what the risk may not touch. Riot said this morning it leased its whole Corsicana campus, 910 MW, to an unnamed frontier AI lab for 15 years, about $28 billion, with rent due on all of it whether it's used or not. On its August call Riot said Rockdale and Corsicana aren't subject to ERCOT's batch process, because their power sits under existing interconnection agreements. Sites already connected could be the winners from anything that slows the queue.
Data: Riot's November 4 8-K and Q2 call, and Cipher's Q3 call, processed by Equibles. https://equibles.com/stocks/riot/documents/1f52b8a4-6e62-415b-b796-9823417b125d?utm_source=substack