It’s been a brutal few days for investors.

On Thursday, the S&P 500 fell 4.4%. The Nasdaq dropped 5.5%. For both indexes, it was the worst day since the tariff-related selloff in April 2025.

Roughly $2.5 trillion in Nasdaq market value was wiped out in a single session, the largest single-day dollar loss in the index's history.

Artificial intelligence (AI) and chip stocks took the worst of it, with the semiconductor index plunging more than 12%.

Nvidia (NVDA) dropped 9.3%. Micron Technology (MU) lost 17.5%. And Vertiv Holdings (VRT), which makes power management and cooling gear for data centers, fell 14%.

The obvious trigger: the midterm election. Investors started to worry that new rules could slow down the construction of AI data centers. And when the biggest buyers of chips might buy fewer of them, chip stocks get hit.

We saw a slight rebound Friday, but everyone still wants to know...

• Is it time to sell AI stocks?

For the benefit of all Jolt readers, I (Chris Reilly) am making an exception today and sharing excerpts from the premium alert Stephen McBride and Chris Wood sent to Disruption Investor members on Friday.

I’ve removed the references to individual stocks, which paid-up members can access here. Paid-up Disruption Investor members: You should also keep an eye on your inbox Wednesday. Stephen has a special email and video coming your way.

If you’re not a Disruption Investor member, upgrade here.

• First, the golden rule. Politics and investing don’t mix.

Warren Buffett said that, and it’s absolutely true.

Simply put: Betting on politics has a poor track record.

As Chris Wood pointed out in the alert, oil and gas stocks thrived under a Democratic White House that campaigned against them. The State Street Energy Select Sector SPDR ETF (XLE) rallied more than 65% from 2021 to 2022. Meanwhile, clean energy stocks sank.

During Trump’s first term, it went the other way: Clean energy soared, and oil got crushed.

Most important: Investors who traded on the headlines got it backward both times. So the worst thing you could do is get scared to the sidelines by political headlines.

Still...

It’s easier said than done. And I’m sure you’re seeing all the AI doom and gloom after the Democratic sweep. So...

• Could a new Congress slow down AI in the near term?

Possibly. New policies can slow the AI buildout, but they won’t stop it… and they can’t route it around the companies we own.

That’s the line we draw between politics and policy. Chris Wood says:

We’ll never tell you to buy or sell based on who wins an election. But we pay close attention to the new rules that come from these elections. It’s why we’ve covered tariffs, export controls, and the CHIPs Act.

Data centers get built because hyperscalers need more compute, and their customers keep demanding more. Permits only decide where a data center is built.

• This isn’t a red vs. blue issue, either.

Texas froze data center permits back in September, well before Election Day.

And local pushback shows up in both parties. AI users are friendlier toward data center construction than nonusers… but most Americans still don’t want to live near one.

Chris Wood again:

The AI industry has already been making this adjustment for a while. If hyperscalers can’t build in Texas, they’ll go to Louisiana or North Dakota.

Finding enough power supply and approvals for one giant campus is tough. So builders have been spreading out into smaller sites wherever there’s power, then linking them across the country to work as one machine.

It’s called “scale-across,” and it’s one of the reasons we own [redacted], which makes the lasers carrying signals over long distances… [redacted], for its chips designed so data centers hundreds of miles apart can “think” at the same time… and [redacted], which makes the network switches that handle all this data traffic.

More sites means more connections, which is also a tailwind for cybersecurity names in the Disruption Investor portfolio.

In fact, Chris says, “Every holding in the Disruption Investor portfolio just got even more crucial to the AI buildout.”

• If you're sitting on cash, this is the kind of selloff you’ve been waiting for.

You don't need to catch the exact bottom. Focus on finding great disruptive businesses profiting from AI.

And if you’re fully invested, Chris says check that your position sizes still let you sleep at night and then turn off the news. Don’t let the daily noise distract you from the biggest infrastructure buildout of our lifetimes.

If you'd like Stephen McBride and Chris Wood guiding you through markets like this, upgrade to Disruption Investor here.

Chris Reilly

Executive Editor, RiskHedge

Reader Mailbag

Kind words from Paula today:

“I love you guys! I'm good! Staying the course!”

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