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Is the AI selloff overblown?… Louis Navellier’s stock to avoid … a blowout jobs report… Brian Hunt, cockroaches, and the American consumer

Last week’s post-election selloff in AI stocks was one for the history books.

On Thursday alone, the Nasdaq 100 plunged 6.4%, its worst day since March 2020, as Wall Street concluded that a Democratic Congress spelled trouble for the AI buildout.

But Friday brought a sharp rebound, and as I write on Monday morning, the buying has picked up steam. The Nasdaq 100 is 3% higher with chip stocks leading the way.

The notable holdout is Nvidia Corp. (NVDA), down about 4% after its board announced an independent investigation into CEO Jensen Huang’s relationship with an alleged Chinese spy. The board said it has no reason to believe national security or Nvidia secrets were compromised.

So, just two trading days after one of the worst tech routs in years, much of the AI trade is clawing its way back. It begs a question…

Was Thursday’s selloff justified?

Wall Street reacts. It doesn’t think

Last week, midterm voters didn’t just hand Democrats control of Congress – they also took aim at data centers.

According to Ballotpedia, majorities voted to restrict data center development in at least 46 of the roughly 50 ballot initiatives on the subject this year. Wall Street read that as the beginning of the end for the AI buildout.

Legendary investor Louis Navellier, editor of Growth Investor, thinks the market got it wrong – badly wrong. Here’s Louis from his podcast on Friday:

Okay, folks, obviously we’re having a big rebound in the tech stocks, and that’s very welcome because yesterday’s sell-off was ridiculous.

The semiconductor index was down over 12%, and it was brutal. I mean, it was machine selling, totally irrational.

As one example where, perhaps, the baby was thrown out along with the bathwater, consider Texas…

Democratic Governor-elect Gina Hinojosa campaigned on pausing new data center approvals and ending the state’s data center sales tax break, which now costs Texas at least $1.3 billion a year.

But on Friday, reports surfaced that she’d said already-permitted projects will be allowed to finish construction. According to Louis, that covers the data centers coming online in 2027 and well into 2028.

And Texas isn’t an outlier. Louis also points out that the data center industry is hardly a stranger to Democratic leadership:

Data centers are in huge Democratic states like Virginia and Pennsylvania. So those Democratic governors never mess with the data centers. And the new ones aren’t going to really mess with them either.

The reason comes down to money. Loudoun County, Virginia, says it has “the highest concentration of data centers anywhere in the world.” In fiscal 2026, those data centers generated $1.2 billion in property tax revenue, or 39% of the county’s entire budget.

Here’s Louis from a Flash Alert he sent subscribers on Thursday, while stocks were still falling:

So, what the politicians will do is they will assure everybody their electric rates aren’t going up because of the data centers. They will accept the property tax revenue and the jobs that data centers create, and that’s that.

Then there’s Washington…

Democrats take control of both chambers in January, but President Trump still holds the veto, and overriding a veto requires a two-thirds majority in both the House and Senate. That makes a sweeping federal crackdown on data centers unlikely.

Louis puts it simply:

We have gridlock. That’s what the stock market likes.

History agrees. In 1995, with Republicans newly in control of Congress and battling President Bill Clinton, the internet buildout kept going, and the S&P 500 gained 34%.

Here’s Louis’ bottom line:

But there is a narrative out there still being spread that the AI boom is going to slow, and that’s not true. There are no analyst cuts, none.

But not every AI stock will “bounce like a tennis ball”

Let’s be clear – this is not a greenlight to cannonball back into any AI stock…or even continue holding all your previous AI positions without a fresh analysis.

You see, there’s a second test coming for the AI trade, and it has nothing to do with ballot initiatives: the cost of money.

Friday’s strong jobs report (more on that below) pushed the odds of a rate hike at the Fed’s December meeting to 82%, according to the CME Group’s FedWatch tool. If the Fed hikes and Treasury yields keep climbing, borrowing gets more expensive across the AI buildout.

The biggest spenders, the hyperscalers, are funding most of their buildout from free cash flow, so they can absorb higher rates. But further down the AI supply chain, some companies lean far more heavily on borrowed money, and for them, rising yields are a real headwind.

This is one of the issues Louis will tackle in a new presentation he’s holding this Thursday, Nov. 12, at 2 p.m. Eastern.

He believes the bond market is sending an important warning heading into 2027, and that higher rates could expose weaknesses in some popular stocks. That’s a big reason he thinks owning the right stocks will matter far more next year than simply being invested.

A market recovery – even an AI recovery – won’t push all stocks higher again. It’s important to be selective going forward. Back to Louis’ Friday podcast:

Bad stocks bounce like rocks, but good stocks bounce like fresh tennis balls…

Wall Street reacts. It doesn’t think. Crowds are dumb. We’re smart. So, in the end, fundamentally superior stocks will prevail…

So, how do you invest in those “fresh tennis balls”?

That’s what Louis’ Stock Grader system was built for. And Louis has developed a new way to put it to work, one designed to help investors spot opportunities and avoid potential losers without needing to predict where the broader market will go next.

He’ll walk through it this coming Thursday and reveal two free stock recommendations: one to buy and one to avoid. And when you register to join Louis for the event, you’ll get immediate access to test-drive the Stock Grader yourself by entering any ticker and seeing how Louis’ system grades it.

You can reserve your free spot right here.

A blowout jobs report

As promised, let’s circle back to Friday’s jobs report.

The Bureau of Labor Statistics (BLS) reported that the U.S. economy added 165,000 jobs in October, nearly triple the 59,000 economists expected. The unemployment rate slipped to 4.1%, and the August and September figures were both revised higher.

The quality of the report was just as encouraging as the headline number. Professional and business services led with 70,000 new jobs, followed by healthcare, transportation, and manufacturing. That’s a meaningful shift from last year, when job growth was anemic and came almost entirely from healthcare.

There was one soft spot…

The average duration of unemployment jumped to 27.1 weeks, the highest since September 2021. So, while people with jobs are largely keeping them, those who lose one are having a harder time finding the next.

The more important number for most households is pay. Average hourly earnings rose 3.1% over the past year. That’s an improvement, but it still trails September’s 3.7% inflation rate. In other words, the typical paycheck isn’t keeping up with the cost of living.

Tomorrow’s Consumer Price Index (CPI) report for October is the next shoe to drop. Alongside it, the BLS will publish its inflation-adjusted wage figures, which will tell us whether paychecks are finally catching up.

The numbers will also shape the Federal Reserve’s next move – and as we noted above, that could matter a great deal for the AI trade.

We’ll report back.

Grumpy consumers are still shopping

That gap between paychecks and prices goes a long way toward explaining the national mood. After all, a raise doesn’t feel like much of a raise when the cost of groceries and gas is rising even faster.

And if you’re wondering just how sour that mood is, Friday’s University of Michigan consumer sentiment survey shows just how sour things remain.

The preliminary November reading rose to 51, up from 48 in October and above the 47.5 economists expected. But that’s not far above May’s reading of 44.8, the lowest on record in data going back to the 1950s.

Here’s the survey’s director, Joanne Hsu, from The Wall Street Journal:

Consumers’ comments revealed growing anxiety over a possible AI bubble.

AI worries, however, were dwarfed by cost of living concerns, which continue to be at the forefront of consumers’ minds across the population.

That lines up with last week’s election, which was a referendum on affordability as much as anything. A CNN exit poll found that 90% of voters called the cost of living a crucial or major factor in their vote.

Put that together and it sounds like the American consumer is finally running out of road.

Don’t count on it

Our senior analyst Brian Hunt, editor of Money & Megatrends, has heard this story before. Here’s Brian from his Oct. 30 issue:

I’ve been investing and reading financial research for 28 years. During all that time, I’ve heard many famous pessimists forecast the death of the American consumer. Well, not even the dot-com crash or the 2008 financial crisis could knock it out.

This is why I say that in the event of global thermonuclear war, two things will survive. Cockroaches and the American consumer.

Brian’s evidence isn’t surveys. It’s stock prices.

In late October, Harley-Davidson Inc. (HOG), Cracker Barrel Old Country Store Inc. (CBRL) and Wayfair Inc. (W) all hit new one-year highs. Since then, Marriott International Inc. (MAR) and Hilton Worldwide Holdings Inc. (HLT) have both hit all-time highs.

And here’s a quiz for you…

On the day after the election, what was the best-performing sector in the S&P 500?

Ready?

Consumer discretionary – the companies selling what people want rather than need – up more than 4%

Back to Brian:

Market prices are not always perfect, but much of the time, they know a hell of a lot more than any economist or investment guru.

So, consumers are unhappy with prices, and they’re eager to tell any pollster who asks. But as soon as they’re done, they’re zooming off to a big Cracker Barrel lunch on that new Harley they just bought.

Coming full circle, whether it’s voters griping about prices or Wall Street panicking over data centers, the headlines have been gloomy. But consumers keep opening their wallets, and as today’s rally shows, investors are opening theirs again too.

We’ll keep tracking it.

Have a good evening,

Jeff Remsburg