AI Selloff Has Investors Panicking, But Ed Yardeni Says It’s Time To Start Buying — ‘Beware Period Is Over’

During an interview with CNBC, Ed Yardeni argued that the recent market turbulence has been driven partly by panic and unwinding leverage.

• Yardeni said Thursday's selloff appeared to reflect an exaggerated reaction to several concerns, including political uncertainty following the midterm elections.
• He pointed to the unwinding of leveraged positions as another factor behind the sharp market moves.
• The strategist also pushed back against concerns that the election results would bring the data center construction boom to a halt.

The recent selloff in artificial intelligence stocks has rattled investors, but veteran market strategist Ed Yardeni believes the panic has created an opportunity to buy rather than a reason to head for the exits.

“I think the beware period is over. And there are buying opportunities,” Yardeni, president of Yardeni Research, said during an interview with CNBC on Friday, arguing that recent market turbulence has been driven partly by panic and unwinding leverage.

AI Selloff Looks Overdone, Says Yardeni

Yardeni said Thursday's selloff appeared to reflect an exaggerated reaction to several concerns, including political uncertainty following the midterm elections, rising bond yields and questions surrounding the pace of data center construction.

He pointed to the unwinding of leveraged positions as another factor behind the sharp market moves.

“I think that the selloff we had yesterday had a lot of kind of panic involved in the way things were unwinding. I think there was a lot of leverage that came undone,” Yardeni said.

The strategist also pushed back against concerns that the election results would bring the data center construction boom to a halt, arguing that investors may be mistaking a slowdown for the end of the investment cycle.

Data Center Boom Faces ‘Speed Bumps,’ Not Roadblocks

Yardeni acknowledged that the data center industry faces mounting physical, political and financial constraints, including power availability, labor shortages, construction costs and community opposition.

However, he believes these challenges are more likely to stretch out the infrastructure investment cycle than derail it. “I think it’s speed bumps. I don’t think it’s, you know, the end of the road for data centers,” Yardeni said.

He pointed to differences in state-level approaches, noting that some states and communities would continue welcoming data center investments even as others push for tighter restrictions.

Yardeni cited Texas as an example, arguing that efforts to slow construction do not necessarily mean shutting the door on new projects.

Data Center Companies May Have To Prove Their Benefits

Yardeni conceded that winning public support for data centers will become more difficult, with developers facing greater pressure to demonstrate that their projects benefit local communities.

“They’re going to have to prove that they’re going to provide their own power, that they’re not going to be careless with water usage,” he said, while adding that the economic benefits of data centers would need to outweigh their potential costs and environmental consequences.

Yardeni also pointed to financial markets imposing discipline on the rapidly expanding neocloud sector, as concerns about heavy bond issuance began to weigh on investor appetite.

Rather than signaling the end of AI infrastructure spending, he sees these developments as signs that the industry is entering a more measured phase of growth.

During the after-hours session on Friday, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, gained 0.17%; the Invesco QQQ Trust ETF (QQQ) rose 0.21%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) edged up by 0.06%. Retail sentiment on Stocktwits toward the S&P 500 ETF was in the ‘bearish’ territory at the time of writing.

The Global X Artificial Intelligence & Technology ETF (AIQ) rose 1.32% on Friday, while the iShares U.S. Technology ETF (IYW) gained 1.31%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<