The Post-Midterm Rally Clock Is Ticking—and These 3 AI Stocks Stand Out

Key Points

• A machine-driven post-midterm selloff knocked the S&P 500 down about 4.4% in a single session, and similar drops since 1950 have preceded above-average three-month gains.
• Shopify and Zscaler have kept uptrends of higher lows intact while Chaikin Money Flow shows smart money buying the dip.
• Veeva Systems has pulled back only about 7% as analysts raise earnings estimates, setting up a potential catch-up in price targets.

The 2026 midterms were supposed to light the fuse on the year-end rally. Instead, investors got one day of relief before a sharp sell-off.

Stocks rallied on Nov. 4, following the midterm elections, but the gains disappeared the next session. On Nov. 5, the S&P 500 fell about 4.4% and the Nasdaq-100 roughly 6.3%, while the Cboe Volatility Index (VIX) jumped above 25. The selling reflected concerns that Democratic wins in key states, including Texas, could stall AI data center projects already underway or still on the drawing board.

That fear hit hardest where the AI trade is most crowded. Yet sell-offs of that magnitude have historically set up stronger-than-normal gains, and the stocks that kept their trends intact through the damage may deserve the first look.

Machine Selling Sparked the Rout, and History Favors Buyers

Marc Chaikin, founder of Chaikin Analytics, reads the damage as mechanical rather than considered. No investment committee met and voted to unload Advanced Micro Devices NASDAQ: AMD over data center risk. Machines did the selling, per Chaikin, and once it started, it fed on itself.

Indiscriminate selling tends to leave bargains behind. The historical record on days like this leans bullish, too.

Since 1950, the S&P 500 has fallen more than 4% in a single session 56 times, by Chaikin's count. Three months later, the index averaged a 6.5% gain, versus a typical three-month gain of about 2.5%. The Nasdaq-100 also closed three standard deviations below its 50-day moving average, which has happened only 19 times since 1999. In those cases, average returns over the next one to three months ran more than 2.5 times normal.

Layer in the 4-year presidential cycle, which has typically delivered post-midterm strength that carries into the pre-presidential year. Chaikin's view is that the rebound window opens before Thanksgiving, so any additional selling before then mostly sharpens the entry point.

Higher Lows Keep the E-Commerce Uptrend Intact

None of the three stocks on Chaikin's list builds data centers. They sell the software and data that run on top of them, which makes a Texas policy scare an odd reason to dump them.

Shopify NASDAQ: SHOP has become the second source in online commerce. Amazon NASDAQ: AMZN still dominates, but many merchants distrust a marketplace that competes with them through private-label products. Shopify has used AI to build a fuller-service platform for small businesses priced out of Amazon and for larger brands tired of seeing their winners copied.

Shares peaked near $180 in mid-October and dipped below $140 in the sell-off, a slide of almost 20%. The pattern underneath is what Chaikin likes. Lows have stepped up from roughly $110 after an earlier earnings report to $124 in September to about $136 in the latest drop. Higher highs and higher lows define an uptrend. Many AI hardware names, by contrast, broke below prior lows and have rebuilding to do.

Shopify holds a Bullish rating on the Chaikin Power Gauge, a 20-factor fundamental and technical model, and Chaikin Money Flow shows smart money accumulating the dip. A positive earnings surprise on Nov. 3 pushed back on earlier fears that AI would make the platform obsolete. Watch whether the $136 area holds.

Rising Estimates Point to Healthcare Data Catching Up

Veeva Systems NYSE: VEEV holds what Chaikin calls the largest pharmaceutical data set drug companies use to develop new treatments and track them after approval. It now supplies that data to customers' AI models to speed drug development. Proprietary, sensitive data like that is hard to swap for a general-purpose model.

The stock pulled back only about 7% from its high and has outperformed the market since late July. Analyst price targets sit close to the current price, but Chaikin weighs estimate trends over targets. Earnings estimates are rising, and healthcare technology shows strong group relative strength, so targets may follow as analysts catch up.

Elevated short interest adds fuel. After the last report, shares jumped from about $240 to $285 in a day. The next report lands in December, and a repeat is possible, not promised.

Cloud Security Leads Cybersecurity on Technicals

Exposed data is the fastest way to turn an AI investment into a liability. A model built on OpenAI's ChatGPT or Anthropic's Claude with a backdoor is exactly the risk that Zscaler NASDAQ: ZS addresses with cloud-based security.

The stock rallied after a well-received September report, then fell from about $260 to $195 in a week, roughly a 25% discount. It broke out above $180 in September after basing from March through July, and the pullback is now testing that zone. Chaikin Money Flow has spent only about 10 of the last 120 trading days in negative territory.

Fundamentals are strong across cybersecurity, but the charts have split. CrowdStrike NASDAQ: CRWD posted a lower high in late October, then a lower low, and sits below its long-term trend line as smart money sells. Fortinet NASDAQ: FTNT looks similar. Palo Alto Networks NASDAQ: PANW mixes hardware and software, while Zscaler's cloud-native platform plugs more easily into existing information technology systems. That makes Zscaler Chaikin's favorite in the industry, with the $180 level as the line to watch.

Intact Uptrends and Smart Money Separate Rebound Candidates From Falling Knives

Shopify, Veeva Systems, and Zscaler sit in different corners of the market, but they share a profile. Each sells software or data that AI makes more valuable, each kept its uptrend through the sell-off, and each shows smart money buying rather than selling.

The upside is that a machine-driven rout may have marked down quality names alongside speculative ones, and history has favored buyers after sessions like this. The risk is that data center policy fears deepen, or that the presidential-cycle pattern simply fails this time. Historical averages hide plenty of bad outcomes.

None of this depends on the data center debate resolving quickly. It does depend on these stocks holding their recent lows. Stay focused on support levels and money flow, because that's what separates a dip worth buying from the start of a real downtrend.

Chaikin is laying out his broader post-midterm outlook, including the $10 trillion opportunity he sees and the AI-driven themes he uses to hunt for overlooked names. Get Marc Chaikin's post-midterm market outlook and hidden-gem stock ideas.