With a Democratic victory in the US midterm elections widely seen as certain, the market is focused on expectations that AI and semiconductor stocks will bottom out after the event. Although conditions in the Japanese and US markets remain volatile, major indices are expected to continue showing a mix of rebounds and corrections.
On 3 November, the Dow Jones Industrial Average closed at $51,786.72, down approximately $200 from the previous day. The Nasdaq Composite, meanwhile, ended trading at 25,372.01 points, up 207.65 points, while the SOX Index closed at 10,600.40 points, up 272.07 points, with a recovery in demand for AI data centers supporting the market. A wait-and-see mood strengthened ahead of the US midterm election results, but short-term oversold conditions were gradually corrected.
It was pointed out that the free cash flow of the five hyperscalers had turned negative due to increased investment in AI data centers and GPUs. Most have stepped up funding through bond and equity issuance, as well as the use of leases and SPVs, heightening concern over credit risk.
The Nikkei Stock Average on 4 November at one point came close to falling below ¥60,000, but rebounded to close at ¥62,188.63. Individual stocks stood out as factors behind the sharp decline in AI and semiconductor stocks, while the prospect of a blue sweep was reportedly treated as a case of the market having already priced in the news.
Kioxia Holdings' outlook for the October-December 2026 quarter calls for operating profit of ¥1.995 trillion, below the market forecast of approximately ¥2.35 trillion, with the company explaining that shipment timing differences were the main factor. This heightened concern in the market that growth in demand for NAND for AI applications would slow.