Midterm Rally Begins and 2 AI Data Infrastructure Stocks are Attractive

Midterm elections kick off one of the best track records you’ll find.

In fact, it’s undefeated.

The midterm rally begins and 2 AI data infrastructure stocks are attractive.

The Democratic sweep of Congress has consumed headlines.

Fears around the pace of the data center buildout caused extreme action in stocks yesterday.

Major markets soared with the S&P 500 and NASDAQ gaining +1.58% and +1.44% respectively.

The small cap Russell 2000 jumped +1.58% and the Dow Jones Industrials Average staged a +3.03% gain.

Inflation pressures eased…paving the way for new market participation.

This big midterm rally shouldn’t come as a surprise.

Our ultimate 2026 midterm election playbook provides evidence of why now is a wonderful time for equities.

I’ll add one more log to this bullish fire.

Going back to 1990, stocks have never been lower 6 and 12-months post a midterm election.

Here you can see that the S&P 500 gains an average of +11.2% 6-months post a midterm vote. Twelve months later those gains average +14.5%.

The NASDAQ 100 does better with 6-month average gains of +20.7% and 12-month gains of +37.3%:

With a historical backdrop like this, staying constructive on stocks makes a lot of sense.

After the pullback in many AI data center stocks, I see diamonds in the rough.

Select companies in the data infrastructure space have attractive valuations and company guidance has been stellar.

If you’re like me and see the carnage in the AI buildout trade as a likely overreaction, hunting for oversold opportunities isn’t a terrible idea.

It’s only going to take sprinkle of positive news to ignite these businesses.

Let’s unpack 2 attractive names.

Midterm Rally Begins and 2 AI Data Infrastructure Stocks are Attractive

Chips power AI.

And they are incredibly powerful at accessing data.

This is where our first opportunity exists.

Our first AI data infrastructure stock to consider is Everpure (P). The data intelligence firm commands a $40 billion market cap.

Their all-flash storage solutions allow enterprises to interact with datasets at high speeds.

The stock has been under pressure like all AI data center related names. Shares have fallen 29% from highs and currently trade at $111.

The forward price to earnings has fallen to ~29 times (FactSet):

Here’s what’s unique about Everpure.

They reported earnings in August that beat estimates… and they raised guidance.

The story gets better. A month later, the company gave a guidance update…reaffirmed FY2027, then raised the bar massively in their preliminary FY2028.

FY 2027 top line revenue is estimated to reach $5.05 billion with operating income of $950 million (mid-point).

FY 2028 sales are now forecasted to reach $7.15 billion with operating income of approximately $1.8 billion (mid-point).

When management under promises and over delivers, that’s a great trait for a growth stock.

It’s no wonder that Big Money has been along for the ride this year.

The telltale signs that institutions are supporting a stock can be seen below.

Each green bar on the left reveals the discrete days when Everpure shares climbed and volumes quietly increased.

Notably, the blue bars indicate how ticker P has appeared on our weekly Outlier 20 report. That indicates very strong accumulation coupled with very healthy fundamentals.

Pullbacks in high-ranking names are an opportunity.

Let’s do another.

Our second AI data infrastructure stock to consider buying on sale is NetApp (NTAP). NetApp is an enterprise storage and data management player with a market cap of just under $40 billion.

Enterprises have tons of data. NetApp organizes it across data centers and the cloud.

The stock has not been immune to the AI pullback. Shares have fallen 17% over the last month and the forward price to earnings sank to 17.7 times (FactSet):

If you want to find amazing companies to invest in, focus on earnings beats and raises. That indicates that business demand is accelerating.

NetApp recently gave an updated FY 2027 guide in September that easily beat their forecast from May.

Here we can see that the latest guide pegs FY2027 sales at $8.1 billion vs prior guide of $7.45 billion.

The FY2027 EPS estimate was increased to $9.88, easily outpacing the prior outlook of $8.85:

When business is projected to improve…money rushes into the shares.

We can see that below in our money flow signals. Early this Spring, volumes began to increase, pushing shares higher and higher.

All-star fundamentals + constant inflows = winning ticket.

These are the patterns we see over and over in our data.

Institutional investors spot tomorrow’s winners.

Listen, markets have been wild this midterm election.

AI infrastructure stocks have been battered as software and cyclical stocks soar.

Much of this has to do with positioning and headline risk.

Earlier this year when the overwhelming narrative was that software stocks will never recover, we took the other side. 

Investing is never easy. There are trying times that eventually look like incredible opportunities in hindsight.

Don’t let fear drive your trading.

Plenty of stocks are under accumulation right now.

And the surefire way to make sure you’re on board when the AI infrastructure tide turns higher is to follow the money flows.

Our PRO subscription allows you to spot daily flows and access our weekly Outlier 20 report.

This is the report that has found EVERY SINGLE ONE of our Outlier stocks.

Our PRO (Annual) subscription now includes access to all 11 Frontiers, and their outlier baskets.

Opportunity rarely lasts forever.

AND don’t miss my conversation with Jason Bodner where we dive into midterm history and 3 AI data infrastructure stocks to consider this earnings season.

Enjoy.