Tech stocks claw back ground after $2.5tn AI sell-off

US tech stocks clawed back some ground Friday morning as Wall Street reopened, a day after an AI-fuelled rout wiped out a fortune. Chipmaker Nvidia jumped more than 7%, Elon Musk's SpaceX rose 6.19% and Tesla added 3.38%. The tech-heavy Nasdaq composite, which had sunk 5.5% on Thursday, was up 1.33%.

The damage from Thursday was brutal. The Nasdaq lost an estimated $2.5tn in market value, according to Dow Jones data. AMD and Micron each slid more than 17%, and the Philadelphia Semiconductor Index, which tracks 30 of the biggest chipmakers, fell more than 12%. By early Friday, AMD had climbed about 12%, Micron was up more than 8% and the chip index had gained around 5%.

The trigger was political: Democrats' midterm wins stoked fears of a slowdown in AI development. Not everyone bounced back. The Dow Jones index slipped 0.87% while the S&P 500 edged up 0.4%, and Apple and Microsoft were both marginally lower. Tesla's 3% recovery still trailed the tenth of its value it lost the day before. The BBC's economics editor, Faisal Islam, noted the factors behind the sell-off haven't gone anywhere — the political backdrop to AI data centre construction has fundamentally shifted.

Katy Kaminski, chief strategist at investment management firm AlphaSimplex, told the BBC that wild swings are normal in moments like this. "People tend to sway [on] the extremes until they kind of figure out what this really means," she said. She added that investors are no longer blindly riding the AI train — they're working out which companies will actually turn a profit.

Russ Shaw, founder of Tech London Advocates, said the midterms surfaced a deeper rethink about AI "in a very extreme way." In his view, the big tech players have to do a far better job making their case, because AI has become a significant political liability.

The day brought other news for traders to chew on. US employers added 165,000 jobs in October, more than double what analysts expected, and the unemployment rate eased to 4.1% from 4.2% in September, according to the Bureau of Labor Statistics. Meanwhile, activists breached the site of a proposed Microsoft data centre in Amsterdam as a wider "Stop Dirty Data Centres" campaign kicked off — a reminder of the local backlash tech giants face over their infrastructure build-out.