The overwhelming victory of the Democrats in the United States midterm elections continues to resonate in the markets, but, after the strong increases in Wednesday's session, Wall Street today faces a dark session, especially in the technology sector, where the uncertainties linked to artificial intelligence intensify. The Nasdaq index, the industry benchmark, plummeted 5.4% in its worst session since April 2025, when Donald Trump declared tariff war. Technology drags down the S&P 500, which is down more than 2%. The European stock markets, thus, have erased their gains, and only the Ibex resists, with an increase of just half a point.
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 stock market falls, financial doubts and poor results. 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 materializes.
Among the first, companies such as SanDisk, Western Digital and Qualcomm sink more than 9%. AMD and Micron, key players in the semiconductor industry, correct more than 12%. Nvidia, one of the business icons of the AI fever and which takes a 7% cut, is not spared from the falls. The punishment is limited among large hyperscalers, companies with diversified businesses but that operate large-scale cloud computing infrastructures. Microsoft and Amazon cut about 3% and Alphabet, 1.5%.
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%. Disappointing results from US chip designer Qualcomm and worse expectations issued by Arm Holdings have revived concerns about the sector's growth prospects.
Jordan Jackson and Stephanie Aliaga, market strategists at JP Morgan, argue that "the AI boom will stay the course, although it may become more expensive, slower and more concentrated in the coming years." In his opinion, "although the new Democratic governors of Texas and Ohio are in favor of tightening the conditions for the development of data centers, the moratoriums have had difficulty becoming law." Now, the electoral result comes with very fertile ground for a correction among technology companies, with growing doubts about the future return of multi-million dollar investments in AI, very tight financing structures and quarterly results that, in part of the sector, have been below market expectations. The alarms have not gone off this week. "We are seeing a clear continuation of the rotation away from chipmakers," said Tim Waterer, chief markets analyst at KCM Trade. "The Democratic victory opens up the real possibility that the expansion of data centers linked to artificial intelligence will hit a regulatory wall if the party keeps its electoral promises," he added.
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 fundamentally alter the sector's growth trajectory," he says.
Oil down
In the energy market, Brent oil rebounds 2% today and thus corrects part of the heavy losses it suffered yesterday (down 8%), standing at $96 per barrel. So far this week, a barrel of Brent has fallen by $21, about 18%, an unprecedented performance 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.
Within the Ibex, the biggest increases are for Rovi, which soars more than 9% after increasing its income by 69% in the first nine months of the year, and for ArcelorMittal, which advances 5%. Banking also added to the gains with increases of more than 2% for Santander and BBVA.
"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 yields 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.
US Treasuries advance for the second day in a row – and yields decline – on expectations that lower oil prices will help contain inflation. Their expectations of further interest rate hikes by the Federal Reserve have been tempered. Treasury yields decline across the curve while the dollar weakens, providing support to risk-sensitive assets and markets outside the technology sector.
