What the midterms mean for defense, healthcare, crypto and AI stocks

Lockheed Martin gets about 70% of its sales from the U.S. government. Medicaid accounts for three-quarters of Molina Healthcare’s premium revenue. Coinbase is waiting on Congress to finish writing the rules for cryptocurrency.

For some of the biggest U.S. companies, Washington is part of the business model. Now, the midterm election could change who holds the leverage.

A Democratic victory in either or both chambers of Congress would grant the party new leverage to investigate companies, challenge federal spending and demand legislative concessions. But their reach would have limits: President Donald Trump would retain his veto and broad authority over tariffs, immigration and federal regulation.

Historically, stocks have performed well under divided government. Under Republican presidents, the S&P 500 has gained an average of 23% in the year after midterms when Congress was split, compared with 16% when Democrats controlled both chambers, according to a Morgan Stanley analysis published Thursday. Analysts often attribute the pattern in part to congressional gridlock limiting sweeping policy changes.

Still, some analysts caution against assuming that pattern will repeat.

“We don’t think that blueprint holds up this time around, and we still see plenty of reasons to be constructive on the U.S. equity market,” said Ariana Salvatore, head of U.S. public policy research at Morgan Stanley.

For investors, the midterm election could reshape which businesses preserve their advantages in Washington, particularly in industries such as defense, healthcare, banking and artificial intelligence.

“There are some policy changes that might be market moving, at least for certain segments,” said Jeff Buchbinder, chief equity strategist at LPL Financial.

On Oct. 21, Sen. Richard Blumenthal, D-Conn., the top Democrat on the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, sought records tied to Trump’s White House ballroom from donors including Cisco, Salesforce, ServiceNow and Kraken. Apple and Nvidia each committed $25 million to the project, according to records obtained by The Washington Post.

Rep. Jamie Raskin, D-Md., has separately sought records involving tariff exclusions, including communications involving Apple’s former CEO, Tim Cook, as Democrats investigate whether Trump used trade policy to reward political allies and donors.

While donations do not prove wrongdoing or favorable treatment, congressional probes still carry risks: subpoenas consume executive bandwidth, reveal internal communications and generate unpredictable news coverage. Few CEOs relish the idea of sitting at a witness table before lawmakers and television cameras.

“It creates…