AI Stocks Face Market Correction Amid Global Rate Hikes

Central banks tighten rates as hiring data exceeds expectations

Major central banks in the United States, Europe, and Japan are tightening interest rates simultaneously in the second half of 2026. This environment marks a shift from 2024 and 2025, when the Bank of Japan raised rates while other banks cut them. The Federal Reserve, the Bank of Japan, and the European Central Bank raised rates in unison in September.

Strong hiring data has increased the probability of a Federal Reserve rate hike at the December meeting, according to CME Group data. Market participants expect a potential repeat of the coordinated global rate hikes in December.

Higher interest rates pressure AI and semiconductor stocks by increasing financing costs. These rates also force investors to downgrade earnings expectations for tech companies.

Democratic election sweep raises concerns over AI regulation

Market analysts attribute the current market correction to these regulatory concerns, alongside WTI crude oil prices between $90 and $100 per barrel and coordinated central bank rate hikes.

Companies tied to AI data-center construction fell this week as Democratic victories in statehouses could slow infrastructure projects, particularly in Texas. Voters have also expressed wariness regarding AI and higher power bills.

Washington’s political power remains split between a Democratic Congress and a Republican White House led by Donald Trump. Trump retains veto power that could limit federal attempts to regulate the AI industry.

Market participants believe the probability of immediate, comprehensive AI regulation is low. They cite concerns over economic cooling, cybersecurity risks, and technological competition with China.

Zhao Jian said the Democratic Party's current "reckoning" is intended to promote high-quality development rather than destroy the market. Zhao said both political parties share an interest in maintaining capital market stability.

Co-CEO Daniel Roberts said IREN owns the land, the power, and the data centers. Roberts said this ownership gives the company more ways to fund growth and lets it set its own pace.

Corporate performance and capital expenditure shifts

The market has become wary of how costly AI growth is after three years of rewarding spending.

Borrowing costs for AI data-center projects have become expensive, and some critics said AI stock prices were in a bubble.

Federal Reserve Chair Kevin Warsh said on Oct. 28 that business capital spending is expanding into a broader range of industries.

U.S. employers added more workers last month than economists predicted, suggesting the economy is persisting despite high inflation. The University of Michigan found consumer sentiment improved for lower- and middle-wealth Americans but declined for those with the largest stock holdings, while one-year inflation expectations eased.

Lam Research rose 8.5% after announcing a $25 billion share buyback program. Micron Technology climbed 5.6%.

Axon Enterprise dropped 17.1% after reporting weaker quarterly results and announcing a $1.2 billion investment in drone company Skydio. Charter Communications fell 5.7% after reporting a quarterly loss.

A new AI Stock Screener was launched to scan for dividend powerhouses and high-growth companies. AP Business Writer Yuri Kageyama contributed to the report.

KOSPI and global markets struggle with foreign capital flight

South Korean and Chinese markets are dependent on U.S. AI capital expenditure, and when spending compresses, earnings for chain members are downgraded. The KOSPI fell 11.71% for the week of Nov.

The KOSDAQ fell 11.06% in the same period, sliding from 724.38 to 644.27. The Philadelphia Semiconductor Index plunged more than 12% on Nov.

Foreign investors were net sellers of 11 trillion won, while institutions bought 4.8 trillion won and individuals bought 4.2 trillion won. 30.

Investors are watching U.S. CPI data and foreign flows to see if the KOSPI can defend the 5,000 mark.

12 could increase short-term volatility.

Analysts debate the sustainability of the AI investment story

Jeffrey Rosenberg, senior portfolio manager at BlackRock, said AI remains a core engine of U.S. economic growth and a positive investment story. He warned that continued AI-related bond issuance could depress bond prices and raise borrowing costs.

When AI shares fall, investors interpret the decline as a signal of slowing economic growth, which pushes Treasury yields lower.

The correlation between oil prices and U.S. Treasury yields stood at 80 percent this year before breaking down in October. International oil prices and U.S. Treasury yields moved together for most of the year until that divergence.

Long-term Treasuries may hedge equity losses if AI spending slows, but sustained high oil prices and persistent inflation could push yields higher.

The equal-weighted average share price for these five major memory chipmakers has halved since the late-June high.

Data shows a significant divergence between real economic data and stock performance, including Taiwan's growing export orders against the declining SOX index and South Korea's export value against the KOSPI.

Zhao recalled that the U.S. market faced aggressive rate hikes and the Russia-Ukraine war in 2022, causing the NASDAQ to fall more than 30 percent. The 2023 collapse of Silicon Valley Bank was resolved within three months, and the 2024 Bank of Japan interest rate decision triggered a 12 percent single-day plunge for the Nikkei.

Market challenges in 2025 included reciprocal tariffs and an AI financing fraud, while the U.S.-Iran war and midterm election upheaval defined 2026. The U.S. market has averted danger through the decade-scale AI capital expenditure wave and Federal Reserve liquidity injections.

Data center construction will continue at a slower, more standardized pace rather than stopping entirely. Zhao concluded that it is unrealistic to expect a direct transition from a bear market to a mad bull market, as crashes are typically followed by a weak bull.

Upcoming economic indicators to watch

The U.S. will release the October consumer price index on Nov. 10 and the producer price index on Nov. 13.

If inflation slows, stabilizing rates could enable a rebound led by oversold and growth stocks.

Na noted that net buying of futures and a return to contango will be key for a market rebound.