Midterm Shift Hits AI Valuations; Costco Options Dominate Trading

The 2026 midterm elections have fundamentally shifted the regulatory outlook for American corporations, creating immediate headwinds for the technology sector. Democrats secured control of both chambers of the U.S. Congress, a move that signals tighter legislative oversight and potential restrictions on artificial intelligence deployment. This political change has forced markets to reprice assets in sectors that previously relied on a lighter regulatory touch.

Companies leading the AI boom, including CoreWeave, Tesla, and SpaceX, saw their share prices slide as investors priced in the new political reality. Senator Bernie Sanders actively promoted a data center moratorium proposal he co-authored with Representative Alexandria Ocasio-Cortez. This legislative threat adds to the pressure on developers who may now face tax increases, strict power mandates, and air-permit delays for on-site gas plants. Over half of the U.S. hyperscale data center pipeline could face heightened regulatory friction, potentially slowing the rapid expansion of hardware supply chains.

The energy sector experienced a volatile reaction to the election results. Traditional oil and gas stocks fell, while solar and green energy titles surged on expectations of renewed federal subsidies. Crude prices also dropped sharply, with Brent crude falling below $95 per barrel. This decline followed Secretary of State Marco Rubio’s indication that a negotiated deal with Iran was preferable to escalating military options, a stance likely influenced by a politically weakened administration facing a new congressional majority.

Defense contractors also took market hits as investors anticipated congressional resistance to the $1.5 trillion Pentagon budget. In contrast, healthcare and grocery stocks held firm. Walmart, Costco, Kroger, and Dollar General remained above pre-election levels, driven by expectations that a Democratic Congress might increase federal spending in these areas. This sentiment contributed to Costco becoming one of the few major stocks to close higher on Thursday.

Costco also ranked as the 15th most active single-stock option in terms of notional value, ahead of names like JP Morgan, Marvell, and Oracle. The stock closed Thursday at over $1,065, trading at roughly 46 times forward earnings. The average forward multiple for the sector sits at over 49 times, indicating that Costco’s valuation remains elevated relative to peers. High share prices have made direct stock ownership expensive, with a standard 100-share lot costing over $100,000.

Investors turned to options to gain exposure with less capital. January 1060 call options cost about $53.45, representing $5,345 for upside participation on 100 shares. Some traders employed more complex strategies to reduce costs further. By selling January 1090 calls at 39.65, traders could lower the net cost of their positions to $13.80. This strategy bets on a pause in the stock’s rise near its mid-May high of approximately $1,090.

The trading activity suggests a market seeking manageable entry points into a high-growth consumer stock. The cost of these option spreads represents just under 1.3% of the current stock price. While the absolute dollar amounts remain substantial for individual investors, the relative pricing offers a structured way to participate in the stock’s performance between specific strike prices.

The shift in market leadership highlights how political control influences sector performance. While tech and energy face new legislative hurdles, consumer staples and healthcare are positioning for potential policy tailwinds. The heavy volume in Costco options underscores the continued demand for the company’s stock despite its high valuation and price point.