$3 trillion wipe-out, CEOs on the volatility of politics, and the status of the AI trade

Yahoo Finance Executive Editor Brian Sozzi gives his thoughts on the recent tech sell-off and what a bear market means for the AI trade. Plus, what the Qualcomm (QCOM) CEO and other business leaders are saying about the volatile state of politics.

Sozzi sits down for a 1-on-1 with Affirm (AFRM) CEO Max Levchin to discuss the company's earnings and the midterm results.

Well, it's been a few hours. And before I get into my open, I wanna start a little bit on some things that came out uh this morning. And that is Elon Musk ending cybertruck production. And I'm a little sad about it. I had nothing. I had no problems with the cyber truck. Now, I think it's positive because now he can plow all that money.He said, into cyberca production and making humanoid robots. Look, I mean, the cyber truck wasn't a perfect truck. It was a cool truck. I don't like parking next to them. They're too damn big, but I appreciate the risks that Elon took there with the cyber truck. Next up, we're coming at, what else we got here on the social media activity board. This, uh, it's bad. It's been a bad.Few days and there's a lot of commentary right now out there on X Instagram, TikTok, on the state of data centers in this country. Chamath, uh, of course, Palpatia, longtime investor in all things tech.Yes, just pretty much summarizing the mood out there in the Silicon Valley community that life for data centers might be a little tougher going into the end of this year and in 2027, 20208, 20209, 2030, 20931, you get the point, and I think Chameth is.Summing that up pretty well on what has been a challenging 12 hours for the markets, but I do want to start on something a little more upbeat, at least for now. If you're looking for something positive after Thursday's shocking stock beatdown, you have come to the right place ahead of the weekend.History suggests stocks tend to do well after the extreme volatility we saw two days removed from the election day blue wave. The VIX volatility index, better known as Wall Street's fear gauge, jumped as much as 70% on Thursday. A move this large has only happened 8 times since 1991, according to data from SEO. Here's what happened to the S&P 500 after the eight prior extreme moves on average. One month later, it has gained 3%. That's pretty good. Three months later, it's gained 7.1%. A year from then.The gain was 14.7%. I'm just going to round up and make everybody feel great. That's 15%. While somewhat comforting, it doesn't exactly erase from the minds what happened in the markets yesterday as risk was repriced for a Democratic control of the House and Senate. I just didn't want to start your day all gloomy.Speaking of loom though, the S&P 500 lost 4.4% of its market value, wiping out $3 trillion in the process. Look at it another way, the total market cap of the S&P 500 fell from $68.9 trillion to $65.9 trillion the largest one-day dollar loss in the index's history.The Dow Jones Industrial Average plunged around 1300 points in its worst single day route since 2020. Tech-heavy Nasdaq created 4.8%, dragged out by semiconductor and cloud giants such as Micron Sandisk. SoftBank shares have been destroyed because of massive tech bets. I have a story right now on this on Yahoo Finance. Go check it out.It's the top of the page. I think Trust chief market strategist Keith Lerner has it right. We are seeing a buyer's strike in tech, and shout out Keith, because I think you nailed it, and we're just going to continue this conversation on all things tech because I have some seeds from the road, the seeds from the tech stock rubble, and these charts really blown my mind. This also comes from from a Keith Lerner. Tech is approaching the average pullback seen during this bull market. Right now, the pullback in tech.About 16%. Now I put this out on X yesterday and I was joking around a little bit. I mean, it got a lot of play. This post is still, frankly, it has gone viral. The selling in tech can get a lot worse if history is any indication, and I think I used a chart like this early last week before really all the selling activity commenced. So you're just seeing a little blip here, but if you go back over history, some of these declines when.Tech stocks pulled back 18% in early 2026, of course that was not pleasant. 27% decline in April 2025, so the declines could get worse. Historically, once tech starts selling off, it is the ultimate momentum trade. It just keeps going until people find another reason to not sell these stocks anymore. Next one up. Next chart. Most extreme valuation compression.Seen this decade and this is another chart that went viral on my X feed yesterday and I wanted to share it with you guys just capture I think where everybody's head is at. valuations for the S&P 500 tech sector have fallen off a cliff. They have just gone straight, straight down, and they right now tech is trading at a discount to the S&P 500 for the first time.Since 2017, so you have an interesting choice here. Do you step in and buy historically cheap tech stocks like this chart is telling you, or do you wade into perceived safe havens, more safe haven type of plays in the S&P 500? I, I'm not going to.That answer. Only you know your risk tolerance. However, I would say when you see tech stocks obliterated like they were Thursday, that is the market trying to adjust for new realities, and that reality is that some of the earnings estimates going into next year in 2028 probably can't believed in large part because of everything that's happening in data centers, and we're going to stay on the carnage because that's how I'm calling it, and it is outright carnage and this was.Uh, this is just crazy. I need a sip of water here.These are some of the biggest named tech stocks.Now in a bear market.And I think I got enough time to briefly say something about all 25, so I'm gonna go, go. Sandys trading at about 4 times forward earnings. Are you kidding me? Arm holdings tied to that SoftBank debacle. Coinbase, I'm a little surprised on Coinbase because crypto, you know, has been hanging in there. Nebu has a core weave type of play, NeoCloud Seagate, tech play, 60% off of ties. Marvell Technology, I'm surprised about Marvell. They had a very good quarter 3 weeks ago, surprised about that one. ServiceNow has been left for dead despite the company, uh, doing relatively well. It didn't like that last quarter though Oracle tide.All things circular financing, and I'm realizing I'm not going to get to all 25. However, it is interesting to see Nvidia trading down about 25% from its highest. I would watch something like a crowd strike. CrowdStrike has been on absolute fire, made a lot of great acquisitions. The business has been there. Things have been strong. CrowdStrike has been firing on all cylinders. I mentioned Palantir too. Palantir, when they reported Alex Carp, these guys freaking crushed it. They had a huge quarter, a huge outlook. There's not much more Palantir could have done.To avoid a decline like this, but I'm gonna keep going through. And another name that has caught my attention, AMD. One of the most watched videos all in Yahoo Finance yesterday was my chat yesterday with AMD CEO Lisa Su, and Lisa said, Brian, demand is strong, not only strong now, demand is strong next year, and she's a believer in all things AI. Now look, I don't expect Lisa to come out and say, hey Brian, you know I'm concerned about the future. Oh dang, you know, I'm getting worried. I mean, but she had good things to say on the, uh, the strength of her business and.I think that is very, very important. One company, and even Circle, you know, I talked to Jeremy Allahr, co-founder and CEO of Circle, this week. Good quarter for them. Made a nice $400 million acquisition. Business looks strong for them, cutting a lot of expenses internally. Good business for Circle. So I'm surprised. I mean, but these declines are absolutely stunning, especially in a Sandis when you're trading about 4.5 times forward earnings. It's almost hard, it's almost hard to believe, and we're staying on tech. This is going to just be turned into one big giant tech show today. I'm looking at.AI data centers and there was so much focus on Texas and the fallout from the blue wave, what it might mean to building data centers in Texas. You saw the retail investors just jumping, dumping stocks hand over fist. Here's another chart I want you to keep in mind because the team at Bernstein called out this morning, keep an eye.On the AI data center pipeline in Georgia, this is basically an overview. You could screen grab this. You can share it with all your besties. You can get out there on Instagram, TikTok. These are the main data center sites in Georgia. And what Bernstein is calling out is one, Georgia may be the underappreciated risk. If you want to get a better sense perhaps of what, where the political winds are blowing on data centers, just keep an eye on Georgia because Bernstein notes the Public Service Commission.Flipped 3 to 2 Democratic, giving Democrats control of the body, deciding who pays for power and how quickly it arrives. Bernstein is basically summing up it this way. One, it could be likely slower or it's going to go slower to get these data centers approved beyond 2028. And when they do get approved, there could be tighter restrictions on them. What that means, it's going to make it more costly for a lot of these companies to build these data centers. And if you're an open AI.Hemorrhaging money, hemorrhaging cash flow. The last thing you want to do is pay more to build or get the Watts or get the business you need. Same deal with Google. We just heard from Google a couple of weeks ago, uh, where free cash flow is massively under pressure. The last thing you want to do if you're Google is pay more to get the AI infrastructure you need. So Georgia, keep an eye on it. It's going to give you a great tell on all things data centers, and we're going to stay on tech. We're gonna have a little more fun on tech because we're drilling into.The consumer Max Levchin's here. Get in here, Max. Come on, let's go. A firm oh my man, good to, good to see you, man. I appreciate that. We're gonna put that right.We gotta get you. I'm gonna put a photo of you on the shelf next because I think you,

these are August,uh, participants. I'm not sure I deserve it, but I'm

sorry. I gotta, I gotta put you next to my new Intel Blue guy here.

I'm much more fascinated by your, uh,

my, my. I do wanna note I purpose, I picked that protein drink out for you that has protein water. You and I are, are fit dudes. I brought that for you. If you wanted any type of this conversation, you just put it in there, right? So she has a particularly tough. So what, like, look, your quarter crushed it.Um, but as a veteran of, of many battles in tech, like what in the world are we seeing right now in markets?

If I knew how to predict markets or even understand them, I'll have a different gig, but uh I think we've been teetering on this.Will they, won't they, uh.AI Capex for a little while and uh.The current bet is they won't.I think, I, I think that's wrong, but, uh, I sure, uh, I'm gonna, I'm an observer, not a participant. I, I got this other gig going on.

Ialways view you having like maybe like three different lives. I mean, you ride you're racing bikes, um, your head's down with your headphones on, like building a firm, but then you have like, you know, everybody in, in tech, you know so many people. Are they really like basically how worried are they about everything that happened 2 days ago in the election?

It's been 2 days and I've been prepping for a quarter, which was, if I do say so myself, pretty stellar, uh, and, and making the rounds afterwards.You know, I think we are living through a profoundly important time in tech, both from a consumer use, from the business use, any way you slice it, we are in the moment in time where you, you want it to be like we're, we're this close to solving some of the world's most important problems. Like you can reframe the current debate around data center construction like 100% real concerns around noise and electricity.Shifting away from residential neighborhoods and all of that like those are real, they're gonna get addressed.BetweenNow, in a solution for cancer, a solution for Alzheimer's is AI progress, like, it is factually obvious that if we can solve.Quantum field theory or almost solve or whatever the current status of that one is if we can do any of your Stokes if we can solve these profoundly difficult mathematical problems, we are some number of iterations away from solving profoundly important biological problems, health, diseases.All those things we'll probably get to figuring out things like anti-gravity before the next decade is out with the use of these tools so we will find a place to build data centers. We will, we should and we must make sure that the communities are not just unaffected by actually beneficiaries of these data centers, but we're not going to be hitting the hard break and saying, you know what, let's go back to the dark ages. We do not want a solution for cancer. Like we just, we just don't.