Trillions Wiped From Tech Shares as Investors Question the AI Boom

Stocks around the world ended a volatile week with a sharp selloff in technology shares. Trillions of dollars in market value were wiped away on Thursday, and the decline began in the United States before spreading to Asia and Europe. The reporter explained that the volatility followed Tuesday's US midterm elections.

Investors said they feared a US Congress controlled by Democrats would bring tougher regulation and slow the massive expansion of AI. That fear raised a broader question among investors about whether the AI bubble was now beginning to burst.

The selloff was severe in South Korea, where exchange operators triggered a 20-minute circuit breaker to halt selling after the main index, the Kospi, plunged more than 8%. Chipmakers took the worst of the decline, with Hynix and Samsung leading the fall amid fears that the Democratic Party could slow down investment in AI data centers. Frustration over the massive server farms had coalesced around the election outcome, a sudden reality check for the highly charged AI optimism of recent years.

The sharpest technology selloff in a year could also complicate the planned IPO of AI startup Anthropic. The report said the company may have to offer investors a bigger discount for its planned November listing.

Some analysts, however, see a necessary market correction and warn against overreacting to the US election result. As long as demand remains strong and businesses continue to produce revenue, investors should avoid overreacting or giving in to excessive panic.

Everyone seems to agree that AI may transform the global economy, but investors are beginning to ask a harder question: how much of what has already been priced into the market actually reflects reality?

The program then introduced Dennis Dick, chief market strategist at Stock Trader Network in Toronto. Dick is described as a veteran Wall Street trader who has spent more than two decades watching how investors react to major events, from elections and financial crises to technology booms.

Dick described the selloff as dramatic. He said the decline in semiconductors and the hardware trade actually started on Wednesday, but it was hidden because the Dow Jones Industrial Average and some real-economy stocks were so strong. Travel names rose a lot, and many stocks were strong after the midterm elections, which masked the damage happening beneath the surface in hardware and tech.

Selling then accelerated on Thursday in the semiconductor stocks. AMD fell 18% and Nvidia fell 10%, while Micron, SanDisk and Nebius, which Dick called retail hardware darlings, were also hit hard. He said the fear was that a Democratic takeover of the House and Senate could slow the AI buildout, which might mean fewer bottlenecks in the supply chain and leave some of these companies overbought at this point.

Asked whether investors are witnessing the AI bubble starting to burst, Dick said it actually started bursting probably in early October. He pointed to SanDisk, which started the year at about $200 and ran to about $2,000, a gain of over 1,000%. The stock topped in October around $1,800 and was at about $800 at the time of the interview, so he said the damage was largely done at the beginning of October.

Dick said that over the last four to five weeks there had been a significant selloff in some hardware names. He suggested investors may have been anticipating a Democratic takeover of the House and Senate and getting ahead of it. He cited prediction markets, where Kalshi and Polymarket gave Democrats a 90% chance of taking the House and 70% of the Senate, and said selling pressure intensified after the election results came in on Tuesday night.

Dick said that at around 11:00 a.m. on the trading desk, it felt as if there were no bids in the semiconductor names, which were going straight down. He said the Nasdaq lost about 2 to 3% in roughly 10 to 20 minutes, so the selloff accelerated before the index bounced a bit. At the time of the discussion, the market was hovering around those lows, trying to decide whether it would go lower.

He added that the semiconductor and hardware names had been selling off for quite some time.

Asked whether the market was overreacting to politics, Dick said the market overreacts to everything. He said it probably overreacted when SanDisk rose 2,000% in a year and when Intel rose 500 to 600% in a few months. In his view, the market gets excited and overreacts to the upside, then gets nervous and overreacts to the downside, which he thinks is happening now.

Dick argued that Democrats taking the House and Senate is not the same as taking over the White House. It would make it difficult for Trump to push through legislation he may have wanted to pass, but Trump has said he is willing to work with Democrats. Dick also said the president would still have the power to veto anything he did not like, so he did not think there was a sudden change of power, although gridlock was making some investors nervous.

On the risk to hardware, Dick used Micron as an example. He said its stock rose about 1,000% and its margins rose from about 20% to 85 to 88% in the last year because RAM prices exploded. Because Micron is a commodity stock, he said that if the supply constraint eased or the buildout slowed, memory prices could fall significantly and margins could come back down. He said the stock looked as if it traded at seven or eight times earnings but could trade at a much higher multiple than expected, and that margin compression was the risk to the hardware trade.

The program asked whether investors were really terrified of AI regulation, or whether they feared that the trillion-dollar AI boom might not be worth a trillion dollars. Dick said many people he talks to are non-believers. They tell him they used a chatbot a couple of years ago, that it gave an answer but did not do much.

Dick said his own firm, the Stock Trader Network, has been building trading tools using Claude and Gemini. He said work that would take about six months to build sometimes takes about six hours. In his view, people who use AI to build tools see that it will change the world, while people who use it only to answer questions see enhanced search. He said the impact depends on what you are doing.

Dick also suggested that companies such as Microsoft and Meta are building impressive things that they have not yet shown publicly, because they do not want competitors to gain an advantage. He said that in the next six months to a year, people would be blown away by what AI does, and he pointed to potential cancer vaccines from Moderna as an example of how AI could be a game changer for biotech.

Dick said he did not think the bubble was bursting. He said the market is in a period of reset: valuations got ahead of themselves, and the market may now be able to start building from here again. He noted that Nebius was down 60 to 70% and Micron was down about 60%.

He suggested the stocks might digest and go sideways for a bit before the next direction becomes clear. He said he still thinks AI is going to change the world. The host noted that many people are hoping he is right, especially those hoping for comfortable retirement portfolios.