How strained is the tech sector in this post-midterm stock market review? Well, let’s put it this way: If you had bought Krispy Kreme at the beginning of the year, you’d be better off than someone who worked their way into Nvidia at the same time, convinced that the AI bubble could never burst.
For all the hype and bluster that has surrounded artificial intelligence and the massive infrastructure buildout around it, Nvidia is sitting just below where it started for the year, at around $187 per share as of Friday afternoon. That’s a far cry from the 52-week high of $243.37 hit on Oct. 6, and to be fair, the chipmaker was still in the black for the year leading up to the post-midterm market selloff.
On the other hand, if you were in the baking business for a long time and had diamond hands (sticky fingers?) for Krispy Kreme, you’d look very pretty. The donut maker has, for some reason, soared this week even as the tech sector has taken a hit, probably because the opposite of chips is fried dough. Its stock jumped nearly 31% on Thursday, reaching $5.03 per share before giving back some of those gains on Friday. (The real reason is apparently that the company is expanding its franchise model and reported better-than-expected quarterly profits.)
Another benefit of Krispy Kreme: It doesn’t face increased government scrutiny (probably). Bloomberg reported Friday that as Democrats prepare to take over the House and Senate, they are setting big targets for investigations and possible regulatory crackdowns, and Nvidia is on the list. According to the report, the new Democratic majority will be particularly interested in whether Nvidia has done enough to prevent its advanced AI chips from falling into the hands of U.S. adversaries.
Generally speaking, however, it appears that the market expects Big Tech to come under scrutiny in January. The sector’s technology stocks have come under pressure in recent days as fears of tougher scrutiny deepen existing doubts about the industry’s trillion-dollar data center buildout. That’s not to say hyperscalers are about to pump the brakes, but their leaders could soon find themselves hauled before Congress to explain what they’re doing.
Given how often tech CEOs are likely to find themselves stuck in boardrooms and government offices, they’ll definitely need donuts. Krispy Kreme, anyone?
Gn bussni
