Wall Street Brokerages Say the AI Sell-Off Went Too Far
Direct answer
Several big Wall Street brokerages said on Monday, November 9, 2026 that last week’s sharp fall in artificial intelligence stocks went too far. Morgan Stanley, UBS, HSBC and Jefferies all argued that investors overreacted to fears about new rules for data centres after the US midterm elections. Their message helped US stocks bounce back on Monday, with the S&P 500 up 1.48% and the Nasdaq up 1.87% by mid-morning.
What happened
Last week ended with a rout. On Thursday, November 5, the S&P 500 fell 4.3%, its worst day since April 2025, and the Nasdaq fell 5.5%, moving into correction territory, more than 10% below its recent peak. Investors worried that a Democrat-controlled Congress would bring strict new rules for data centres, the huge buildings full of computers that power AI, and that the heavy spending on AI might not pay off.
On Monday, the brokerages pushed back on that fear. Reuters reported that Morgan Stanley called the selloff overdone and said the most likely result is that some data centre projects are delayed from 2028 to 2029, rather than cancelled. The bank said that would stretch out the AI spending cycle, which could even help by smoothing out supply and demand across the industry. Morgan Stanley told clients it was positive on large tech companies including Amazon, Meta and Alphabet, and saw chances in chip makers Nvidia and Broadcom, data storage firms Seagate and Western Digital, and optical networking firms Coherent and Lumentum.
HSBC said in a note that it is using the correction to buy more shares again, leaning into tech stocks in the United States and Asia. It pointed to the planned stock market listing of AI lab Anthropic as the main event to watch in the coming weeks.
Jefferies analyst Jane Gibbons called the November 5 selloff “reactionary” rather than a real reset. She noted that in the past, when the S&P 500 has fallen more than 4% in a single day, it has risen 11.9% over the following six months and more than 20% over twelve months on average. UBS analysts said markets had become too negative about AI political risk, AI credit risk and AI spending.
The brokerages pointed to two events that matter more than the election result: Anthropic’s upcoming listing and Nvidia’s quarterly results, due after markets close on November 17. Nvidia is expected to report data centre revenue up more than 12% from the previous quarter.
US stocks rallied on Monday as investors shook off last week’s worries. By 09:46 a.m. ET, the Dow Jones Industrial Average was up 652.49 points, or 1.27%, to 51,938.22, the S&P 500 was up 108.81 points, or 1.48%, to 7,485.67, and the Nasdaq was up 458.92 points, or 1.87%, to 25,038.34. Nvidia shares fell on the day, though, as investors waited for more clarity about the board investigation into chief executive Jensen Huang.
For background on the selloff itself, see our earlier post on the S&P 500 plunging 4.3% in its worst day since April 2025. For the Nvidia investigation, see Nvidia’s board opens a probe into CEO Jensen Huang.
Why it matters for beginners
A selloff and a correction are two different things, and the words matter. A selloff is a sharp fall in prices. A correction means a fall of 10% or more from a recent peak. Last week the Nasdaq entered correction territory, which sounds alarming, but corrections happen often in stock markets, and they do not always mean something is broken.
The brokerages are making a simple point: a price fall and a business problem are not the same thing. The companies at the centre of the AI trade are still spending heavily and still growing their data centre revenue. What changed last week was the mood, not the earnings. That is why the brokerages called the move overdone.
That does not mean they are right. Brokerages also have an interest in calm markets, and their past record is mixed. Jefferies’ own note shows the other side of the same fact: after big one-day falls, markets have often recovered, but “often” is not “always”. For a beginner, the lesson is to separate the news from the noise. Ask what actually changed about a company, a rule or an economy, and what only changed about how investors feel.
What to watch next
Nvidia reports quarterly results after markets close on Tuesday, November 17. Its data centre revenue is the number to watch, with analysts expecting growth of more than 12% from the previous quarter. A strong report would support the brokerages’ view. A weak one would give the sellers fresh reason to doubt the AI spending story.
Anthropic’s planned listing is the other event the brokerages flagged. No date has been set, but it is expected to be one of the biggest listings of the year, and it will test how much investors still want to own AI companies.
US inflation data also lands this week. October consumer prices are due on Tuesday, November 10, with forecasts for a 0.3% monthly rise in headline prices and 0.2% in core prices, which leave out food and energy. Producer prices follow on Friday, November 13. Those reports matter because they shape what the Federal Reserve does with interest rates in December.
FAQ
What does “overdone” mean in this context?
It means the brokerages think the fall in share prices was bigger than the news justified. In their view, the risk of strict data centre rules is smaller than investors feared, and the AI spending plans of the big tech companies are still intact.
What is a data centre, and why does it matter for AI?
A data centre is a large building filled with computers that store data and run software. AI systems need enormous computing power, so companies are spending hundreds of billions of dollars building data centres. That spending is the “AI capex story” the brokerages talk about, and worries about it were at the heart of last week’s selloff.
What is a correction?
A correction is a fall of 10% or more from a recent peak. It is a normal part of stock markets and happens most years. It is different from a bear market, which is a fall of 20% or more.
Why did the election result hit tech stocks?
Investors worried that a Democrat-controlled Congress would push for tougher rules on data centre building, such as stricter local permits and environmental limits. The brokerages argue those risks are real but limited, and unlikely to become a nationwide halt on building.
Should I buy the dip?
There is no single right answer, and this article does not make recommendations. Brokerages have their own interests, and markets can keep falling after a bounce. A beginner should focus on understanding what they own and why, rather than trying to time a single day’s move.
Sources
Reuters, November 9, 2026, “Wall St brokerages say AI selloff overdone, downplay Democrat regulation risks”, https://www.reuters.com/business/finance/wall-st-brokerages-say-ai-selloff-overdone-downplay-democrat-regulation-risks-2026-11-09/.
Devdiscourse, November 9, 2026, “US STOCKS-Wall St rallies after last week’s AI rout; Nvidia falls”, https://www.devdiscourse.com/article/international/4004004-us-stocks-wall-st-rallies-after-last-weeks-ai-rout-nvidia-falls.
This article is for general information and education only. It is not legal or financial advice.
