BEP Research founder Ben Pouladian examined the technology stock sell‑off and AI infrastructure worries on the “Making Money” program.
U.S. equities fell sharply on Thursday as investors dumped AI‑related stocks, but analysts say the market’s unease runs deeper than a single volatile day.
The Dow Jones Industrial Average lost 1,833 points, a 3.44% decline, while the Nasdaq Composite plunged 5.52%, marking its worst session since April 2025 and pushing the Nasdaq into correction territory—more than Lilat 10% below its recent record high.
At the root of the rout are mounting concerns about the massive spending and borrowing that are fueling the AI boom and whether those investments will ultimately pay off.
STOCKS PLUNGE AS DEM MIDTERM SWEEP FUELS AI REGULATORY CONCERNS
“Debt,” said Paul Mueller, an economist with the American Institute for Economic Research, when asked what most worries Wall Street regarding AI. “Wall Street is worried about the enormous amounts of debt obligations being issued by tech companies to build data centers, both because interest rates have been rising and because there is greater political uncertainty around how much opposition data‑center construction will face,” Mueller told FOX Business.
A view of the New York Stock Exchange and surroundings in New York City Nov. 5, 2026. U.S. stocks remained volatile after the midterm elections. (Selcuk Acar/Anadolu via Getty Images)
The scrutiny intensifies as tech giants pour billions into the infrastructure that powers the AI surge.
Adam Patti, CEO of VistaShares, outlined three overlapping concerns confronting investors: political uncertainty, return on investment, and an overcrowded AI trade.
“The first is political: the midterm results, including victories in several key data‑center states, have raised fears that the build‑out will encounter more regulation, slower permitting, and pushback over power costs,” Patti explained.
“The second is return on investment, with investors questioning how long hyperscalers can sustain spending at this pace while free cash flow turns negative. The third is positioning. Semiconductors were the most crowded trade in the market, and crowded trades unwind violently.”
US STOCK FUTURES MIXED AS DEMOCRATS SCORE KEY MIDTERM ELECTION WINS
Traders work on the floor of the American Stock Exchange at the New York Stock Exchange in New York City on Nov. 4, 2026. (Michael Nagle/Bloomberg via Getty Images)
eToro market analyst Jakub Rochlitz suggested that heavy borrowing and crowded positioning likely amplified the sell‑off.
“What the markets were missing was a spark to start the sell‑off. It seems that the combination of the election outcome and some disappointing tech earnings was enough to tip markets over the edge. We are likely seeing a large number of crowded and leveraged trades unwind,” Rochlitz said.
Power constraints are another focal point, as the voracious electricity demands of AI data centers raise questions about grid capacity, utility expenses, and the speed at which new facilities can be brought online.
“Power is the real bottleneck in AI today, more than chips, and it deserves investor focus,” Patti noted.
He added that much of the political risk resides at the state and local levels, while data‑center development could migrate to regions with greater power availability and fewer permitting obstacles.
“Capacity relocates. It does not disappear,” Patti observed.
Despite Thursday’s plunge, Patti downplayed the likelihood that AI demand has fundamentally weakened.
“This is a valuation and sentiment reset, not a change in fundamentals,” he said.
BUSINESS LEADERS, INVESTORS WEIGH IMPACT OF DEMOCRATS’ MIDTERM SWEEP ON MARKETS, AI AND TRAVEL
Mueller urged retail investors not to over‑react to a single volatile session.
“For most people, focusing on diversification and holding investment positions for long periods of time is by far the best strategy,” he advised. “And that involves doing your best to ignore market volatility.”
