US technology stocks rebounded on Friday morning after the Democrats’ victory in the midterm elections triggered a sharp sell-off in AI-related companies on Thursday. The Nasdaq 100 rose by more than 2% after falling by 6.4% on Thursday, its worst trading day since the Covid-19 pandemic. Nvidia rebounded by almost 4% during morning trading after a fall of more than 9% the previous day that wiped out $400 billion in market value. The sell-off was driven by fears that Democratic control of Congress could slow the AI infrastructure build-out through restrictions on new data centres, which provide the computing power needed to train and run AI models.
The logic of the market move is straightforward: fewer data centres would mean lower expected demand for chips and other AI infrastructure, and therefore lower expected revenues for companies such as Nvidia and Micron. Nevertheless, markets began recovering on Friday as investors questioned whether Thursday’s sell-off had been too extreme. A stronger-than-expected US jobs report also improved confidence, while investors began buying technology stocks at lower prices. The rebound suggests that while concerns over future AI regulation remain, Thursday’s market reaction may have been driven by short-term panic rather than a major change in company fundamentals, highlighting how volatile markets can be in uncertain political and economic times.
References:
[Cover Image] Construction World. (2023, September 4). Adani Group stocks decline two to four per cent amidst OCCRP report [Photograph]. https://www.constructionworld.in/policy-updates-and-economic-news/adani-group-stocks-decline-two-to-four-per-cent-amidst-occrp-report/43982
FT Reporters. (2026, November 6). Markets live: US stocks rebound after tech rout. Financial Times. https://www.ft.com/content/642b32dc-e3a1-4df8-ae91-5c84bdeb89e0
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