Investing.com — In a note on Friday, Yardeni Research told investors that it believes the sell-off in Thursday’s session represents a buying opportunity.
“Since September 15, we’ve counseled proceeding with caution in the stock market through the midterm elections,” the firm wrote. We anticipated buying opportunities after Tuesday’s elections. Stocks rallied on Wednesday. But they plunged today.”
They noted that the S&P 500’s 4.4% sell-off was its worst day since the April 2025 tariff shock, while the Nasdaq’s 5.5% decline meant it entered correction territory.
“The cold shower we warned might follow a democratic sweep arrived late,” said Yardeni, explaining that Wednesday’s rally was driven by short covering.
However, on Thursday, investors began “discounting the implications of the Democratic sweep for the economy’s golden goose: the AI investment boom.” The firm added that the political backlash against data centers is gaining momentum, highlighting an NBC exit poll that said 76% of voters opposed new facilities in their communities.
“Perhaps most consequentially, Texas, which accounts for nearly 30% of planned US data center additions in 2028, elected Gina Hinojosa as governor after she promised to halt new approvals,” said Yardeni.
Goldman Sachs estimates that states facing possible restrictions account for around 45% of planned U.S. data center capacity.
However, Yardeni believes the political backlash, alongside financial and physical bottlenecks, are “just speed bumps” and says the selling is overdone.
“Data centers will get built, albeit at a slower pace. Speed bumps should prevent the AI boom from moving too fast and crashing around the next curve,” they stated. That’s why we view Thursday’s sell off as a buying opportunity.”
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