On Wall Street, the Democratic victory in the midterms has burst the AI bubble

The Democratic victory in the U.S. midterm elections has impacted the AI market, causing a significant drop in tech stocks. On November 5, the Nasdaq fell by up to 5.3%, reflecting a broader decline in technology shares. The previous day's gains were misleading, driven by political clarity and rebounds from major companies like Amazon and Microsoft. However, underlying issues emerged, particularly the decline in semiconductor demand linked to Intel's disappointing results, suggesting a cyclical downturn in the industry. This has affected companies providing essential components for AI, akin to the 'pick and shovel' businesses during the gold rush.