Evercore gives investment guidelines under the “blue wave”: AI infrastructure sentiment puts pressure on it, names 5 “defensive” technology stocks

The Zhitong Finance App learned that Wall Street investment bank Evercore ISI said that after the Democratic Party took control of the House and Senate in the 2026 midterm elections, Amphenol (APH.US), Arista Networks (ANET.US), Apple (AAPL.US), Cisco (CSCO.US), and Motorola Solutions (MSI.US) formed a group of “defensive” technology stocks that investors should hold.

In a report to customers, the bank's analysts wrote, “We believe (Democrats control Congress) may affect our coverage of the entire IT hardware/networking sector, particularly potential regulations and legislation relating to data centers.” The analyst added, “Assuming that the data center development environment becomes more limited, this may lead to more negative feelings about AI infrastructure-related targets within our coverage.”

As far as data center construction is concerned, market sentiment is likely to cool down further in states such as Georgia, Ohio, and Texas. Among them, companies such as Tesla (TSLA.US) and SpaceX (SPCX.US) have significant exposure to the Texas data center market. Shares of the two companies, headed by Elon Musk, fell on Wednesday.

However, analysts said that the slowdown in construction may actually benefit companies that previously mentioned “storage price increases,” because demand for NAND and dynamic random access memory (DRAM) may be suppressed, thereby benefiting Apple, as well as PC-related companies such as Dell (DELL.US) and HP (HPQ.US).

Furthermore, all types of regulation relating to artificial intelligence may be strengthened, but it is unclear how broad the scope of regulation will be.

Analysts also suggested that the current shortage of computing power supply — regulation may worsen it further — will bring favorable pricing to developers and cloud computing companies that “already have significant production capacity”, as reflected in rising GPU hourly rates and data center rents.

Finally, given the ongoing war in Iran, geopolitics could also be an issue. Evercore analysts wrote, “We think the initial reaction would be to sell off AI stocks, but the question is how much this will change fundamentals and whether other factors (inflation, yield) will hedge over time.”

Therefore, the bank recommended investors to buy the above five companies for different reasons.

The analyst concluded, “Amphenol is our diversified approach to retaining AI exposure: higher signal, power, and optical content, combined with the strength of defense, commercial aviation, and industrial businesses, and reduced reliance on any single AI architecture or customer base. If the situation declines, this is the target to hold — it can handle historical demand fluctuations better than most other companies. Arista is our high-quality way of expressing AI/networking topics, with an open mind across back-end AI, front-end and campus deployments; the key controversy remains supply-side execution and revenue transformation in a constructive demand-side context. We acknowledge it's not a cheap stock, but it's the highest-quality asset in terms of profit margins. There is plenty of room for growth from front-end clouds, campuses, and new customer orders (Google, etc.) to help maintain growth. Apple provides a profit driver different from data center construction through the iPhone product portfolio and pricing and service business; our research shows that demand is resilient, and gross margin repair and price flexibility are two key tests. When investors want to turn to defense, this is the target worth keeping an eye on. Cisco was relatively backward before, but the reality is that it has had quite a few good winds—core campus products are in the renewal cycle, and optical communication and Silicon One are also well off. Motorola's role in delivering mission-critical solutions to public safety agencies has enabled them to have a macro-resistant (AI-independent) business model, while Silvus and D-Fend have aligned the company with new growth vectors.”