Tech swings on midterms: $2.5 trillion lost after rally

The midterm elections have put AI and data centers on trial, but the market's reaction has been anything but one-directional. The day after the elections, tech stocks shot up, a bit paradoxically, because investors apparently believed potential limits on AI and data centers could tamp down spending on compute and thus improve tech company margins that have made investors nervous. Then on Thursday, tech stocks almost across the board plunged even more, for a collective loss of $2.5 trillion in market cap and a Nasdaq drop of more than 5.5%, on more generalized worries that the AI boom could slow. Investors, in short, are still sorting things out.

Big Tech wins and data center suppliers operators such as chipmakers and neoclouds lose, though it also asks whether everybody loses. Amid that uncertainty, Marvell Semiconductor made a surprisingly huge acquisition with Lumentum, a bet on the AI boom continuing, though the drop in Lumentum's stock price has some speculating it could hunt around for another offer. Strong tech earnings, meanwhile, reflected investor wariness even before the election, and the headline question Dave Vellante posed in his Breaking Analysis last weekend was whether enterprise AI can pay for the boom.