Why the AI stock sell-off could matter far beyond Wall Street
PARIS, Nov 8 — “Correction” is not the word investors want to hear, but the stampede out of AI an...
The recent surge of investors out of AI and technology stocks this week has raised concerns about the longevity of the four-year bull market. The surge in spending on data centers to train and power artificial intelligence models has become a major growth driver for the US economy, contributing to 30% of growth in 2025 and 2026, according to Bruno Cavalier, an economist at Oddo BHF.
The demand for cutting-edge chips and other high-tech equipment has boosted the technology sector's share prices, but this growth has come with environmental and human costs that have raised concerns. The Democratic wave in this week's midterm elections in the United States has heightened investor fears of a regulatory crackdown, leading to heavy selling on Wall Street.
With 43% of household wealth exposed to the stock market, a sustained market downturn would directly impact American households, particularly retirees, creating a wider economic risk. The richest 10% of Americans, who own the most stocks, would feel the impact of a market crisis, which could also reduce their spending power. Rising interest rates make the situation more complicated, as they increase borrowing costs for the billions of dollars in debt AI firms have taken on to finance the data center rollout.
Despite the risks, American politicians are aware of the situation and are likely to take a pragmatic approach.
Written by urgent.news from Malay Mail's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
