Memory Chip Makers Slide as Dow Surges After Midterm Elections
Shares of memory makers, including Micron, SanDisk and Western Digital, declined while the broader market rose after the U.S. midterm elections.
Shares of memory chip makers fell sharply the day after the U.S. midterm elections, even as the broader market rose. Micron lost about 7 percent, SanDisk about 8 percent, and Western Digital also about 7 percent. Seagate shares dropped roughly 8 percent, and the decline continued in pre-market trading, indicating weak investor sentiment across the entire memory sector.
Overall market sentiment was the opposite. The Dow rose about 3 percent, its best post-election day in 44 years. Tech giants, including Microsoft, Apple and Amazon, gained significantly. Investors welcomed the certainty about the Democratic Party's victory, which gained control of Congress, and this factor, judging by the market's reaction, outweighed the risks associated with policy.
Local elections, according to available data, are linked to the drop in memory stocks. Voters punished Republicans over rising prices and an unpopular war, and numerous candidates who opposed data centers won at the state and local levels. Restrictions on data centers could reduce demand for server memory, and it is this risk that appears to concern investors in the industry.
An NBC/SSRS exit poll showed that about 76 percent of respondents oppose locating data centers near their homes. This sense of local opposition became the basis for concern about future demand. However, it is still unknown whether such restrictions will actually be introduced, as decisions on them will depend on specific local and state procedures that have not yet been determined.
It is also unclear whether the sell-off in the memory sector reflects a prolonged slowdown in artificial intelligence. The question of whether the decline is a short-term reaction or the beginning of a broader drop in demand remains open, and there are not yet enough facts for a definitive answer.
Meanwhile, skeptical voices were also heard in the market. Elon Musk joked about orbital data centers, while Chamath Palihapitiya and Bill Ackman warned of a possible slowdown in the industry. Their comments added tension to an already unstable mood around a sector that until recently was considered one of the most promising. For now, investors appear to be weighing these risks, while overall optimism about the technology sector remains strong.
Source: fastcompany.com
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