AI Bloodbath on the US Stock Market: “Panic”

 

Isak Fritzon

 

Published 16:44 | Updated 18:12

 

Traders on Wall Street. Photo: Seth Wenig/AP/TT

The Democrats’ resounding victory has struck fear into the tech giants.

The New York stock market is now plummeting—but no one knows for sure why.

“I am very surprised,” says Elin Benjaminsson, a stock market strategist at Avanza.

The tech-heavy Nasdaq index fell by as much as 5.5 percent on the New York stock exchange on Thursday.

The broad S&P 500 index also saw a sharp decline, dropping 3.2 percent.

One possible explanation is the Democrats’ major victory in the midterm elections. Investors are concerned that the party’s success could lead to stricter regulations and slow down the massive expansion of AI data centers in the United States.

This is particularly relevant in Texas, where many large data centers are planned.

Musk loses billions

However, there is no clear, single trigger, according to Elin Benjaminsson, a stock market strategist at Avanza.

“It came as something of a shock. The decline happened very, very quickly.”

Several major US tech companies have seen their share prices nosedive, reports CNBC.

Elon Musk’s Tesla and SpaceX have both fallen by ten percent.

Chipmakers Nvidia and Broadcom have both plummeted by nine percent. Software giant Oracle is also showing deep red numbers.

Yet, the Democrats’ election victory was already clear on Wednesday—a day when the US stock market held up well. 

“Panic in the market”

Many tech companies have recently reported strong results. Despite this, the trend is that investors want to see more tangible outcomes before committing further capital.

“There is increasing pressure to demonstrate that you can actually make a profit.”

She finds the timing of this sell-off surprising.

“People are trying to piece together a puzzle. I am very surprised,” says Elin Benjaminsson.

She believes part of the decline is a “snowball effect.”

“When drops of this magnitude occur, it can trigger forced liquidations. It creates a kind of panic in the market.”

Advice: Review your risk exposure

So far, the Stockholm Stock Exchange has fared significantly better amidst the market turmoil.

The broad OMXSPI index closed down 0.12 percent.

However, even individual Swedish investors could be affected by the sell-off on Wall Street.

Many global index funds hold significant stakes in American tech companies that have invested massive sums in AI.

Elin Benjaminsson therefore suggests that investors review what portion of their capital is allocated to such companies.

“The biggest mistake you can make is to sell in a panic. But you should be aware of the risks you are exposed to.”