Evercore ISI, a Wall Street investment bank, has identified Amphenol Corporation (APH.US), Arista Networks (ANET.US), Apple Inc. (AAPL.US), Cisco Systems (CSCO.US), and Motorola Solutions (MSI.US) as a group of "defensive" technology stocks that investors should hold in the event Democrats secure control of both the House and Senate in the 2026 midterm elections.
Analysts at the firm wrote in a note to clients that Democratic control of Congress could affect their coverage of the broader IT hardware and networking sector, particularly regarding potential regulation and legislation tied to data centers.
They added that if the data center development environment becomes more restrictive, it could generate additional negative sentiment toward AI infrastructure-related names within their coverage universe.
Regarding data center construction, market sentiment in states such as Georgia, Ohio, and Texas could cool further, with companies like Tesla Inc. (TSLA.US) and SpaceX (SPCX.US) holding notable exposure to the Texas data center market. Shares of both companies, led by Elon Musk, declined on Wednesday.
However, the analysts noted that a construction slowdown could actually benefit companies that have previously discussed "memory price increases," as demand for NAND and dynamic random-access memory (DRAM) could be suppressed, which would be favorable for Apple Inc. (AAPL.US) as well as PC-related companies such as Dell Technologies (DELL.US) and HP Inc. (HPQ.US).
Additionally, various AI-related regulations could tighten, though the scope of such oversight remains unclear.
The analysts also suggested that the current compute supply shortage, which regulation could exacerbate, would create pricing tailwinds for developers and cloud computing companies that already have substantial capacity in place, manifesting as higher GPU hourly rates and data center rents.
Finally, given the ongoing war with Iran, geopolitics could also become an issue. Evercore analysts wrote that they expect the initial reaction to be a selloff in AI-related stocks, but the question is how much this would change fundamentals and whether other factors such as inflation and yields would offset the impact over time.
As a result, the firm recommends investors buy the five aforementioned companies for different reasons.
Analysts concluded that Amphenol Corporation (APH.US) is a diversified way to retain AI exposure: higher signal, power, and optical content combined with strength in defense, commercial aerospace, and industrial businesses reduces reliance on any single AI architecture or customer group. If conditions trend toward recession, this is the stock to hold — it can better withstand historical demand fluctuations than most other companies. Arista Networks (ANET.US) is a high-quality way to express the AI/networking theme, with exposure spanning back-end AI, front-end, and campus deployments; the key debate remains supply-side execution and revenue conversion against a constructive demand backdrop. The analysts acknowledged it is not a cheap stock but described it as the highest-quality asset from a margin perspective. Ample growth runway exists from front-end cloud, campus, and new customer orders including Google, helping sustain growth. Apple Inc. (AAPL.US) offers earnings drivers distinct from data center construction through its iPhone product mix and pricing as well as its services business; their research shows resilient demand, with gross margin recovery and price elasticity being two key tests. When investors want to rotate toward defense, this is the name worth continued monitoring. Cisco Systems (CSCO.US) had previously lagged relatively, but the reality is it has several tailwinds — its core campus products are in a refresh cycle, and there are tailwinds in optical communications and Silicon One. Motorola Solutions (MSI.US) has a macro-resistant, non-AI-dependent business model due to its role in delivering mission-critical solutions for public safety agencies, while Silvus and D-Fend align the company with new growth vectors.
Comments