The resounding victory of the Democrats in the US midterm elections continues to resonate in the markets, but in a very different tone than on post-election Wednesday. Wall Street is experiencing a black Thursday in the technology sector today, where uncertainties linked to artificial intelligence intensify. The Nasdaq index, the industry benchmark, plummets 5.5% in its worst day since April 2025 and enters correction territory by falling more than 12% from its highs. Technology has dragged down the S&P 500, which fell 4.35%. The European stock markets have erased their morning gains, and only the Ibex has managed to resist, which closed with a rise of 0.4%.
At the bottom of the selling wave are the prospects for a slowdown in the installation of data centers and, therefore, investments in technology. These doubts have unleashed a stampede of investors in the technology sector, which has accumulated several weeks of punishment on the Stock Market, doubts about its financing model and worse than expected results after several quarters with record profits. It rains in the wet in a sector that is slowly seeing how investor confidence is being diluted and the rotation of their portfolios is accelerating. The collapses are particularly severe in companies that are in the data center value chain: manufacturers of chips, processors and memories are the weakest link if the feared slowdown in investments in AI, the main catalyst for the increases in equities in recent years, materializes.
Among the large ones that were punished was SanDisk, with a collapse of more than 22%, while Western Digital's 18% and Qualcomm's 9.5% sank up to 20%. AMD and Micron, key players in the semiconductor industry, have corrected more than 17%. Nvidia, one of the business icons of the AI fever, is not spared from the falls, which has taken a cut of more than 9.2%. The punishment is limited among large hyperscalers, companies with diversified businesses but that operate large-scale cloud computing infrastructures. Microsoft has cut 3.58%, compared to 2.2% for Amazon, and 1.94% for Alphabet. A panorama that has led the Philadelphia semiconductor index to suffer a punishment of more than 12.2% on the day. “Tech stocks need the economic boom to continue, like a shark that has to keep swimming to survive,” warns Trevor Greetham, director of multi-assets at Royal London Asset Management, in statements reported by the Financial Times.
Doubts have already started in the Asian markets, where South Korea's Kospi - the most benefited from the commitment to AI worldwide - closed with a fall of 5.2%, with values such as SK Hynix sinking 9.5% and Samsung Electronics, 7.6%. In Europe, ASML, which designs the machines used for chip manufacturing, has seen a drop of 6.5%. JP Morgan argues that “the AI boom will stay the course, although it may become more expensive, slower and more concentrated in the coming years.”
The electoral result arrives with the ground already fertilized for doubts to emerge. For a month now, the euphoria of AI has given way to skepticism, given the dizzying investments necessary to develop data centers: in just one week seven companies have placed debt and shares for 388,000 million. And, even though the use of AI is increasingly widespread and specialized, income at the moment is very far from being able to pay those mortgages. Furthermore, the sector's latest round of results has been disappointing, with Alphabet marking the biggest drop in its history on the stock market.
The alarms have not gone off this week: in one month the Philadelphia semiconductor index has plummeted 29%. “We are seeing a clear continuation of money outflows from chipmakers,” said Tim Waterer, chief markets analyst at KCM Trade. Coco Zhang, a strategist at ING, adds that increased scrutiny of tech companies by Democrats is expected over the next two years as they try to develop AI regulation. “However, stricter regulation of AI and data centers is unlikely to alter the sector's growth trajectory,” he says.
The flight of investors from technology has been echoed in all markets, although on a different scale. On Wall Street, traditional companies such as Goldman Sachs, Caterpillar and Boeing are falling sharply. They are, on the one hand, dragged by the automatic sales generated by funds indexed to the S&P 500, a product that has grown linked to technology. But, at the same time, AI has been a key support for the US economy in recent quarters. Money, meanwhile, has looked for ports of refuge, such as US debt, particularly the short-term: the two-year bond yield has dropped 10 basis points, which has been three for the one-decade bond. In Europe debt has remained relatively stable, but peripheral risk premiums have increased. The Japanese yen has emerged stronger (0.5%), as it is a usual safe harbor, but the euro has remained stable.
Oil below $100
In the energy market, Brent oil rebounds more than 3% today and thus corrects part of the heavy losses it suffered yesterday (down 8%), standing at $98 per barrel. So far this week, the Brent has dropped $20, about 18%, unprecedented behavior since the times of the pandemic. Expectations for peace in the Middle East have been reinforced once Vice President JD Vance has assured that voter discontent over the war and the relationship between the United States and Israel condemned the Republicans in the elections. Senate Democratic Minority Leader Chuck Schumer vowed to end the conflict, which has now entered its ninth month.
"A Trump forced to negotiate is, in principle, good news for the financial markets, although the effect will be uneven, because it will be more difficult to approve a new fiscal stimulus. The first visible effect is the moderation of debt returns and this favors equities, particularly the most indebted companies and those linked to AI, which are weighed down by the fear of a deterioration in their financial structure," explain MacroYield experts.
