Several leading Wall Street strategists say the sharp sell-off in US technology stocks after the midterm elections is a chance to buy, not a reason to run for the exits, even as the market's biggest names remain under pressure.

The S&P 500 fell 4.4% on Thursday, while the Nasdaq 100 dropped 6.4%. The S&P 500 rebounded 0.3% on Friday, but it has still fallen 2.5% since the midterm election results were announced. The primary concern in the market is that a Democratic victory may lead to tighter regulation of data centre construction and the artificial intelligence industry.

Morgan Stanley: add exposure now

Mike Wilson, chief US equity strategist at Morgan Stanley, said the next two to three weeks are a good time to add exposure. He maintains his year-end target for the S&P 500 at 8,000, approximately 8.4% above Friday's closing level. According to Bloomberg data, the average year-end target among major Wall Street institutions is 7,973.

Ed Yardeni, chief investment strategist at Yardeni Research, described the decline as a correction rather than a bubble bursting, with a year-end target of 7,900. He believes the AI bubble is gradually deflating but does not imply a rupture that would severely harm the economy, and he noted that attractive buying opportunities are now emerging.

Jonathan Golub, chief equity strategist at Seaport Global Holdings, set a year-end target of 8,200, calling himself a committed buyer and arguing that investors should not rush to exit after the market's post-election adjustment.

A more cautious voice at Wells Fargo

Not every strategist is as confident. Wells Fargo's chief equity strategist, Ohsung Kwon, is relatively cautious, with a year-end target of 7,700. He noted that semiconductor and AI infrastructure stocks have been key drivers of market performance this year, but this sector will remain under pressure. The Philadelphia Semiconductor Index fell 12% on Thursday and is down 36% from its June high, and Kwon argued that further market gains will still require contributions from high-beta trades.

However, Kwon believes that if concerns over reduced AI investment persist, tech giants like Alphabet and Amazon could actually receive support, as markets may anticipate these companies being forced to cut capital expenditure, thereby improving profit expectations. He said: "We don't want to be overly bearish here."

Correction or something worse?

The divide among strategists reflects the central question facing investors: whether the sell-off is a healthy correction in an overheated AI trade, or the start of a deeper reassessment of the huge sums technology companies are spending on data centres and chips.

The optimists point to history. US stocks have typically recovered strongly in the months after midterm elections, and the strategists calling the dip a buying opportunity argue that the political shock, rather than a collapse in earnings, is what drove the selling. The cautious camp points to the scale of the chip sell-off and warns that semiconductor stocks, which led the market higher for much of the year, could stay under pressure while investors wait for clarity on AI spending and regulation.

Several strategists continue to view this sell-off as a signal that the correction may be nearing its end, but whether that assessment holds true depends on the actual policy impact on AI infrastructure investment in the weeks ahead.