On a day when the world's technology markets were still reeling, a partial recovery offered only a brief pause in a deeper reckoning. The Democratic victory in the midterm elections, which put new scrutiny on artificial intelligence and the data centres that power it, has unsettled investors who wonder whether the vast sums poured into AI will ever justify themselves. Whether this is a healthy correction or the start of something harder remains, for now, unresolved.
AI Stocks Rebound Slightly After Trillions Wiped From Market Values
A market purgatory where raw tech must prove its widespread economic value
Mark
Why did a political result hit chip stocks so hard?
Mimi
Democrats campaigned on new rules for AI and data centres, and they now hold both houses of Congress plus key contests in data centre states. Investors worried that could slow AI development.
Luke
Worth saying the source says that was "in part" the cause. It doesn't tell us how much of the 5.5% fall was politics.
Mark
So what else is going on?
Mimi
Doubts about whether the huge spending on AI will pay off. Pierre Baqué called the drop a necessary correction and urged more financial discipline.
Luke
Though he runs an AI firm and Russ Shaw is a tech advocate. Those are opinions, not measurements.
Mark
And the jobs report?
Mimi
165,000 jobs added, more than double expectations, with unemployment at 4.1%. Neil Birrell argues the real economy is strong enough that market fears may be overblown.
Luke
That's one investor's reading. The report doesn't prove the sell-off was an overreaction.
Mark
Was the rebound broad?
Mimi
No. The Nasdaq rose 1.1%, but the Kospi fell 6%, SK Hynix lost over 10%, and the FTSE fell 1.01%.
Luke
And one good day doesn't settle anything. Even AJ Bell's Dan Coatsworth says next week will tell us more.
Il Polso
- The Nasdaq plunged 5.5% after Thursday's rout, wiping out trillions in value as chipmakers bore the heaviest blows.
- South Korea's Kospi sank 6% and SK Hynix shed more than 10%, spreading the panic far beyond Wall Street.
- A Friday rebound, with the Nasdaq up 1.1%, gave tired traders a flicker of relief but no guarantee of stability.
- Fears of new Congressional AI rules and doubts about returns on enormous spending keep the sector on edge.
- Strong US jobs data and sturdy growth suggest the wider economy may hold, but markets are waiting to see if next week confirms the bounce.
On a day when the world's technology markets were still reeling, a partial recovery offered only a brief pause in a deeper reckoning. The Democratic victory in the midterm elections, which put new scrutiny on artificial intelligence and the data centres that power it, has unsettled investors who wonder whether the vast sums poured into AI will ever justify themselves. Whether this is a healthy correction or the start of something harder remains, for now, unresolved.
Shares in artificial intelligence and technology companies recovered a little ground on Friday, but only after a sell-off had erased trillions of dollars in market value. The Nasdaq Composite ended up 1.1%, reclaiming part of the 5.5% it had lost the day before. The rout began in the US on Thursday and rolled through Asian and European markets, with chipmakers and AI-linked firms suffering the most.
Much of the selling was driven by fear that the Democratic midterm victory, which gave the party control of both houses of Congress, would slow AI development. Several Democrats had campaigned on tougher rules for AI and data centres. President Donald Trump responded by voicing support for "super intelligence", calling opposition to it the choice of "foolish leadership".
Abroad, the damage was sharper. South Korea's Kospi closed down 6%, and SK Hynix fell more than 10%. European indexes slipped, and London's FTSE 100 dropped 1.01%, where traders were also weighing a Bank of England rate rise.
Beneath the numbers lies a deeper unease. Industry voices have argued that a correction was overdue and that AI firms must show clearer financial discipline and communicate its benefits more effectively. Strong October jobs data offered some reassurance that the economy remains robust. Yet whether Friday's bounce holds into next week, as investors catch their breath, remains the question everyone is watching.
Shares in artificial intelligence and technology companies clawed back a little ground on Friday after a sell-off that erased trillions of dollars in stock market value. The Nasdaq Composite, heavy with tech names, ended the day up 1.1%, recovering only part of the 5.5% it had fallen the day before.
The rout began in the US on Thursday and then ran through Asian and European markets into Friday. Businesses closely tied to AI development took the worst of it on Thursday, chip and semiconductor makers in particular. Part of the selling was driven by worry that the Democratic victory in the midterm elections would slow the pace of AI development.
The party won control of both houses of Congress, along with key contests in states that have been part of the race to build AI data centres. A number of Democrats had campaigned on new rules and regulations for AI and data centres. On Friday, President Donald Trump restated his support for what he calls "super intelligence", saying that only "foolish leadership" would say no to the riches it brings.
Elsewhere in the US, the picture was mixed. The S&P 500, which tracks the largest publicly traded American companies, closed up 0.3%, while the Dow Jones Industrial Average was flat for much of the day and finished down 0.4%. Companies that had lost hundreds of billions in market value, including Nvidia, SpaceX and Tesla, won back some ground.
Asia and Europe fared worse. South Korea's Kospi closed down 6%, with chipmaker SK Hynix falling more than 10%. The main indexes in Germany, France and Spain all ended lower, and the FTSE 100 in London dropped 1.01%. UK traders were also weighing the Bank of England's decision to raise interest rates, and its signal that another rise could follow to curb rising prices.
There is also a longer-running unease about whether the enormous sums going into AI will pay off. Russ Shaw, founder of Tech London Advocates, told the BBC's Business Today that the election was sending a message that a rethink was needed, and that the incoming Congress would focus on AI "in a very dramatic way". He described himself as a big fan of AI but said the companies were not communicating effectively, particularly in the US, about its benefits. Pierre Baqué, chief executive of Neural Concept, called the share moves a "necessary market correction" and said the industry must show greater financial discipline. He described a "market purgatory" in which raw technology has to prove its broad economic value.
The jobs data offered a counterweight. US employers added 165,000 jobs in October, well above the average monthly gain and more than double what analysts had expected. Unemployment eased to 4.1% from 4.2% in September, and the Bureau of Labor Statistics noted it has stayed between 4.1% and 4.3% since March. Neil Birrell of Premier Miton said the economy is running hard, which may mean the risks worrying markets are less threatening to the real economy than feared.
Whether Friday's bounce lasts is the open question. Dan Coatsworth of AJ Bell called it a brutal week and said that once investors have had the weekend to catch their breath, next week should show more clearly whether the tech trade is fighting back or going down the pan.
Citazioni salienti
The industry must move beyond unchecked infrastructure investment and demonstrate greater financial discipline.— Pierre Baqué, chief executive of Neural Concept
Next week could give a clearer indication of whether the tech trade is going down the pan or fighting back.— Dan Coatsworth, head of markets at AJ Bell
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Economy & Finance