Wall Street Peers Into Abyss of AI Trade as Midterms Expose Risk

Yahoo Finance · Jeran Wittenstein and Ryan Vlastelica · 2026-11-06 09:30 UTC

For months, investors have been worrying about a long list of risks to the gravy train of artificial intelligence spending.

Fears of the worst-case scenario for the AI trade kicked in after the US midterm elections on Tuesday, in which Democrats secured majorities in the Senate and House of Representatives and won control of state houses and governor's mansions across the country. Many of the winning candidates ran on anti-AI platforms, raising the possibility that the development of data centers could grind to a halt in many places.

That realization sent traders racing for the exits starting on Thursday, dumping shares of everything tied to the hundreds of billions of dollars in projected AI spending. The Philadelphia Stock Exchange Semiconductor Index plunged 12% while the tech-heavy Nasdaq 100 Index fell 6.4%, the biggest one-day drops for both since the Covid pandemic hit in March 2020. And AI poster child Nvidia Corp. led the market lower, tumbling more than 9% and losing more than $440 billion in market value.

"People are questioning the growth assumptions for data center suppliers and pulling back pretty broadly," said Peter Tuz, president of Chase Investment Counsel, whose fund owns shares in chipmakers Nvidia and Advanced Micro Devices Inc. as well as major AI spenders like Alphabet Inc. and Amazon.com Inc. "It is easy to draw a line from the election results to increased uncertainty toward the regulatory environment, and from there to the growth outlook for these companies."

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