Daniel Wolfram
As the Nasdaq suffers its worst collapse in 55 years, analysts warn that an extreme 156-year valuation bubble and a sudden revolt over AI and data centers are a even larger threat.
Last week delivered a brutal shock to the financial world. On Thursday, November 5, the Dow sank by 1,833 points, while the benchmark S&P 500 tumbled by 335 points.
Tech stocks took the hardest beating, sending the Nasdaq down 1,422 points in the worst single-day drop of its 55-year history.
President Donald Trump quickly pointed the finger at the recent midterm votes. Taking to Truth Social, he wrote, “The stock market suffered one of the worst days in history based on the results of the election. Such a sad thing to watch!”
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Financial analysts at The Motley Fool on Yahoo! Finance argue that his claim ignores glaring red flags. Trouble had been quietly building for months.
Blaming the election
A major headache for investors stems from state-level politics. Democratic contenders flipped five governorships in the elections, capturing crucial tech hubs across Texas, Georgia, and Ohio.
Those state offices wield significant power over artificial intelligence infrastructure. In Texas, Governor-elect Gina Hinojosa promised to halt new approvals until lawmakers settle fights over local water, power, and air rights. While Trump has threatened to veto federal tech regulations, he has zero authority over state governors.
Local roadblocks create immediate friction for tech giants. Without permits and reliable electricity grids, corporate profit targets quickly unravel.
Steep prices
Dangerous valuations left equities exposed long before voters arrived at polling stations. The market entered 2026 at its second-priciest valuation in 156 years, according to The Motley Fool.
Back in June, the S&P 500 Shiller price-to-earnings ratio climbed to 42.84, towering over its historical average of 17.45. History offers a stark warning. Over the last century, whenever this valuation gauge crossed 30, stock indexes eventually plunged by anywhere from 20 to 89 percent.
Credit markets sounded the alarm first. Corporate bonds sold to finance data centers had been tumbling for months, forcing borrowing costs to spike. The election results did not create this turmoil; they merely pulled the trigger.
