6 November 2026
If you are covering the fall in technology stocks and the impact on the semiconductor and hyperscaler companies, please find below a comment from Ben Barringer, head of technology research at Quilter Cheviot:
“With the market now having digested this week’s midterm election results, it has decided it doesn’t like the look of what it sees from a technology perspective. This is hitting the semiconductor companies hard, and due to their weighting in various indices, it is helping to bring down share prices all around them.
“It is important to stress that demand for semiconductors remains strong. Data centres will continue to be built over the next couple of years, and it is in 2029 onwards that we are seeing greater uncertainty and downward revisions. Clearly a lot can happen between now and then, but the bigger concern is the amount of capex that has been earmarked for spending may need to be revised down. Capex is no longer being revised up, and this is a market that needs increasing capex to ensure positive sentiment.
“Should we see downward revisions to capex, there may be more volatility to come – particularly for the semiconductor companies, but less so the hyperscalers given less capex means more the free cash flow. Semiconductors are cyclical in nature, and concerns had been rising of late that a slowdown was due. This is accelerated things substantially. A virtuous circle could quickly turn into a vicious one, and they must now ride it out until the direction of travel becomes clearer.
“That said, it is too easy to say that the Democrats will be bad for data centres. Yes, there will be a pause in the buildout and delay in approvals, but if you go off the words of new Texas Governor Gina Hinojosa, they are likely to be more pragmatic and ensure resources are more fairly allocated. This has not always been the case in Texas and thus while there will be a slowdown of some sort and this will hit the earnings of the semiconductor companies, it perhaps will not be as bad as feared.
“For now though, this is not yet a buying opportunity for investors and more pain could yet come. Attention will very quickly focus on Nvidia’s next earnings update in a week and half’s time, while capex spending of the hyperscalers will be scrutinised in January. We may see buybacks increased to help support share prices, but their success is often questionable. With AI financing becoming harder to get, the earnings bubble we have seen may be starting to deflate. The companies left behind will be bruised by this, but they remain good quality and have robust earnings, even if the slowdown is here.”
