European markets rally while US tech stocks slide amid AI concerns

The CAC 40 index closed down by less than 1%, at 8,139 points (-0.81%), and the EuroStoxx 50 fell by 1.04%. This contrasts sharply with a 6.36% drop in the Nasdaq.

Europe’s financial markets have been buoyed by the possibility of a less aggressive stance on the Iran conflict following the midterm results. This has led to a decrease in oil prices, with Brent crude falling below $100 a barrel, potentially easing inflation and fuel costs. The resulting pressure on interest rates has lessened, and there’s hope for a reduction in trade tariffs, providing relief for export-oriented companies.

Furthermore, third-quarter 2026 earnings reports have confirmed a strong profit trend for European companies. According to Lazard frères gestion, the aggregate profits of companies in the Stoxx Europe 600 are expected to increase by 20% for the entire year of 2026 compared to 2025.

Bolstered by these positive factors, the CAC 40 briefly surpassed 8,000 points last week, reaching as high as 8,200 points, a level not seen since September.

In the United States, the Democratic wave is raising concerns about potential policy shifts, particularly impacting the artificial intelligence sector, a key driver of US growth. This is reflected in the Nasdaq’s declining performance. Bruno Cavalier, chief economist at Oddo BHF, notes that AI-related spending contributed to US growth by nearly 30% in 2025 and 2026, approximately six times its current weight in the GDP. Data center construction spending surged by 150% during that period, indicating potential overinvestment.

Despite these concerns, the US economy released encouraging figures, with unemployment falling from 4.2% to 4.1% in October and 165,000 new jobs created, exceeding expectations.

Xavier Chapard, Strategist at La Banque postale AM, believes the Democratic wave demonstrates rejection of policies pursued by Donald Trump, such as tariffs and the Iran conflict. While stricter federal regulation of AI remains unlikely under a Trump administration, even with a Democratic Congress, the election of a Democrat in Texas – the state with the most data center projects – who called for an immediate moratorium on their development, could slightly slow the pace of AI deployments.

After Thursday’s losses, the Nasdaq rebounded slightly on Friday, gaining nearly 2%, but analysts remain cautious about investor sentiment, which appears sensitive to any negative news from the tech sector.