Nasdaq falls 5.5% and enters correction with doubts about the cost of the artificial intelligence race

The Nasdaq plunged 5.5% in a single trading session and officially entered correction territory, dragged down by a 12% drop in the semiconductor index. The Dow Jones lost more than 1,800 points, on a day that reignited the debate about the price of shares linked to artificial intelligence.

According to Estéfano Santos, founder of X-Trader and Nasdaq Futures trader for more than 10 years, the movement was born from a question that the market began to ask: who will pay the bill for the AI ​​infrastructure. In a video published on the X-Trader TV channel, he stated that the drop, although strong, should not be called a crash.

The work and the material store

Estéfano used a metaphor to explain the background. The biggest technology companies in the world build data centers, warehouses he describes as the size of neighborhoods and full of chips. The investment forecast for next year is US$1.2 trillion, more than R$6.6 trillion, equivalent, in his words, to around half of everything Brazil produces in a year.

In this analogy, Nvidia, Micron and other chip manufacturers would be the store that sells the material for the work. According to Estéfano, the stock market has paid increasingly higher prices for these companies for years, because the price of a share reflects what the market believes it will sell in the future, and not just what it sells today.

The trigger of the day, in his opinion, was political. On Tuesday, the Democrats won the midterm elections in the United States, and the market began to consider that the new Congress could introduce more rules for the construction of data centers. Estéfano highlighted that the possibility is still just a doubt: Congress hasn't even taken office, but the stock exchange, he said, negotiates uncertainty before the law.

The order of the fall

On Thursday, the money came out of the chips first. The semiconductor index fell 12%, and the sector's main ETF fell 11%, the biggest drop since March 2020. Micron lost more than 12% and Nvidia, more than 6%. Then the entire Nasdaq fell 5.5% and was more than 11% below last month's record high. As the correction is defined as a drop of more than 10% from the top, the index crossed this line, as explained by Estéfano.

The fall also affected the Dow Jones, which brings together banks, pharmaceutical companies and sporting goods manufacturers, sectors with no direct relationship with chips. For Estéfano, this shows that, when fear rises, investors sell what they can, and not what they would like.

Wall Street is divided. Peter Boockvar questions the value of US$1.2 trillion and sees the possibility that the episode marks the beginning of the end of the AI ​​party as it is known. Eric Johnston, from Cantor Fitzgerald, sees a huge change in investment prospects. Larry Adam, from Raymond James, considers the sale without criteria an opportunity, and Rob Schein remembers that Azure, Microsoft's cloud, grew 48% in the last quarter.

Estéfano stated that he does not know who is right, and said that the experts themselves do not know either. As a historical reminder, he cited the year 2000: the internet did change the world, but the Nasdaq took 15 years to return to the top at that time. He emphasized that he is not saying that the scenario is the same, but rather that a technology can be right and the price wrong, at the same time.

For the market operator, Estéfano defended risk discipline: defining how much he accepts to lose, adjusting the size of the position to the current volatility and closing operations when reaching the limit. He highlighted that he does not recommend buying or selling and that trading involves risk. In his opinion, the question that the day left remains open, and the bill, almost always, falls to those who entered without a plan.

Automatically translated from Portuguese.