US tech stock rout: is the AI bubble bursting?
Summary
U.S. technology shares plunged after Democrats won the midterm elections, wiping more than $3.2 trillion from the U.S. stock market in one day. Investors fear a Democrat-controlled Congress may slow AI development and data-center construction, adding to existing worries that tech company valuations have grown too high.Key Facts
- The Nasdaq fell 5.5% on Thursday, while the S&P 500 fell 4.4%.
- The sell-off spread to Asian and European markets on Friday.
- Investors expect a Democrat-controlled Congress could tighten oversight of AI and data-center construction.
- Some states considered pauses on data-center construction amid public opposition to the facilities.
- The article says the cyclically adjusted price-to-earnings ratio reached its highest level since 2000, indicating unusually high U.S. stock valuations compared with profits.
- Alphabet shares fell after it reported lower-than-expected profits, reducing its market value by more than $500 billion.
- Nvidia, Apple, Google, Microsoft, Meta, Amazon and Tesla together account for more than a third of the S&P 500.
- The article says a prolonged technology sell-off could affect savers worldwide through funds that track the S&P 500.
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