By Anita Hamilton

With the midterm elections a little more than six months away, people are already placing their bets on which political party will come out ahead and what it will mean for businesses and the economy.

Democrats' successful effort to redistrict Virginia congressional maps in their favor on Tuesday underscores the intensity with which political parties are looking to gain an edge ahead of the critical votes.

Now Morgan Stanley analysts have released their first take on what either a Democratic sweep of Congress -- currently favored on prediction markets -- or Republicans maintaining control would mean for various business sectors.

While most would see very mixed outcomes depending on which political party prevails, that's not the case for energy, where a win for either one would be a net positive for the sector.

But as with most things, the devil is in the details. A Republican sweep would bolster companies in the fossil fuels and nuclear energy sectors, whereas a Democratic takeover would help renewable energy firms that focus on things like wind and solar.

Renewable Resurgence

Ever since last summer, when President Donald Trump signed his tax and spending bill into law, "energy policy has become modestly more challenging for renewables," the analysts wrote in their Monday report. From curtailing tax credits for wind and solar facilities to attempts to halt wind projects being constructed along the East Coast, the Republican-led policy shift has renewable energy firms largely playing defense.

That could change with a Democratic sweep, however. "While renewable permitting authority largely resides with the executive branch, in a narrow or Democratic sweep scenario this could become a point of leverage in negotiations with Congress over legislation aligned with the Trump administration," they wrote.

Companies with heavy exposure in renewables such as NextEra Energy, Brookfield Renewable Partners, France's TotalEnergies, and AES (which is being taken private) could benefit if that comes to pass.

Nuclear Bonanza

The nuclear sector, meanwhile, "continues to benefit from bipartisan support in the US, and we see the midterms as a potential catalyst for incremental legislation aimed at accelerating timelines and/or encouraging additional investment ," the analysts wrote.

Nuclear has had a resurgence as demand for energy to power artificial intelligence data centers has soared. A continuation of the Republican-led status quo could benefit nuclear stocks like Constellation Energy, which currently has deals with Big Tech firms like Meta and Microsoft. It will also help companies like GE Vernova, NuScale, and Oklo, all of which are developing smaller-scale reactors.

Fossil Fuel Future

Lastly, traditional fossil fuel companies like Exxon, Chevron, and BP could get a bump from a Republican sweep. That's in part because ongoing deregulation could open up more drilling, lower costs, and shield them from climate-related lawsuits.

What's more, Republicans have been supportive of so-called bring your own power solutions for AI data centers that rely on fossil fuel sources. Companies positioned to benefit include GE Vernova, which makes natural gas turbines to power data centers, as well as natural gas producer EQT.

Write to Anita Hamilton at anita.hamilton@barrons.com

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April 22, 2026 11:45 ET (15:45 GMT)

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