- The AI trade got hammered, but the damage was uneven.
- The 4 charts below highlight what Wall Street will be watching in the post-election investing landscape.
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Ron Burgundy from "Anchorman" said it best: "Well, that escalated quickly." That famous quotable line-turned-meme was a perfect way to describe the stock market last week.
Things started innocently enough. The Nasdaq 100 did briefly enter correction territory on Monday, extending a sell-off from the previous week, before stocks snapped back the next day.
Then the midterm elections happened.
The resounding blue wave wasn't necessarily a surprise. But it reignited fears around the speed, cost, and political viability of the data-center buildout. That anxiety came to a head on Thursday, when the Nasdaq 100 and Philadelphia Semiconductor Index (SOX) suffered their worst days in six years.
And then, right on cue, the most beaten-down stocks staged a (partial) comeback on Friday.
So was the episode a nasty but necessary AI-trade reset, or the start of something uglier? The 4 charts below show what went haywire last week, and what Wall Street will be watching in the days ahead.
1. Chips: A dip-buying test
The move: Chip stocks went from the market's AI superstars to its biggest casualties. The SOX index's terrible Thursday dragged it to its worst week since April 2025TK, down TK% over five days. The sell-off showed that any disruption of the current data-center spending timeline will have immediate negative ripple effects across the AI trade.
What's next: A Monday rebound will only be convincing if chipmakers start outperforming the Nasdaq again. If semis keep lagging even when the market steadies, investors may be pricing in a more lasting slowdown in AI-infrastructure demand.
2. The AI builders: Funding concerns are getting real
The move: The companies building AI's next layer of computing capacity got absolutely clocked. Their reliance on debt served as a scarlet letter throughout the sell-off as investors favored firms with more secure finances.
What's next: The performance of this group will offer a critical read on sentiment around the data-center boom. If the stocks can't find a floor — or if CoreWeave's bonds come under renewed pressure — it would suggest AI-financing fears are here to stay.
3. Hyperscalers: Existing capacity becomes a moat
The move: Last week was a great example of how the AI trade is splintering. Hyperscalers are being favored because they already have data centers, and deep pockets to boot. Their operations could get more valuable if future construction becomes more difficult. The shift aligns with investors' recent preference for "quality" companies.
What's next: The market is about to test an increasingly debated question: Can a slower AI buildout actually be a positive for Big Tech in the long run? Those companies' next comments on capex and guidance on cloud growth will matter more than ever.
4. Rotation: The market beyond AI
The move: AI didn't speak for the whole market last week, even if it dominated the conversation. The damage was concentrated in stocks most exposed to a high-speed data-center buildout.
What's next: This is the check on whether widening market breadth is sustainable, or a flash in the pan. If the equal-weight index and non-AI sectors keep holding up, recent volatility could look more like healthy consolidation than a lasting headache.
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