The market's enthusiasm for artificial intelligence-related stocks experienced a significant downturn following recent US election results. The S&P 500, which includes major AI industry players like Nvidia and Oracle, saw a decline of approximately 3.9% by mid-afternoon EST, erasing previous day's gains. Nvidia shares have fallen below their value at the start of the year, and memory and storage specialist Micron has experienced a drop of around 15%.
This market correction appears to be influenced by a combination of factors, including Democratic victories in US midterm elections and widespread local votes aimed at curbing data center expansion. These political developments have seemingly reduced investor confidence in the continued rapid growth of AI infrastructure.
Analysts suggest that the market is now reassessing the substantial capital expenditure anticipated for AI development. Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, noted to CNBC that investors are questioning the previously forecasted $1.2 trillion in AI-related capital expenditure for the upcoming year, with a growing sentiment that such projections may not materialize.