An election result in America has shaken the biggest bet in global markets: artificial intelligence. Last Tuesday, the Democrats swept the US midterms, in what's being called a blue wave. By Thursday, more than $3 trillion had been wiped off US and global stock markets, with technology shares suffering their biggest one-day fall in six years. The Nasdaq fell 5.5%, its worst day since April 2025, and Nvidia dropped more than 9%. Here at home, though, the JSE went the other way. So what is the blue wave, why are investors so nervous, and why has it been good for South Africa?
What the blue wave actually is
The blue wave is a political term. It refers to the Democrats winning control of both chambers of Congress, plus at least five governors' offices. Many Democrats campaigned against the data centres that power AI, often over what they do to electricity prices. A Federal Reserve Bank of Dallas working paper estimated that wholesale electricity prices had risen 6.9% because of data centres. The result that matters most for the industry came from Texas, home to 27% of planned US data centre capacity. Its governor-elect, Hinojosa, who won by 7 percentage points, promised to ban new data centre approvals until laws are passed to protect Texans.
Why a data centre slowdown hurts the AI trade
Now, here's where the problem starts. AI needs enormous computing power, which means building data centres filled with specialised chips, cooling systems and other equipment. Companies like Nvidia supply the chips, while others provide everything from electricity infrastructure to the components connecting it all. Investors have poured money into these businesses, expecting demand to keep growing: Goldman Sachs estimates that AI-related capital spending could total about $7.6 trillion from 2026 through 2031.
But that entire supply chain depends on new data centres being built. If Democrats slow down approvals, it means fewer orders for chips and equipment, and less revenue across the industry. UBS analysts estimate that if construction pauses spread, nearly a third of the new US data centre capacity expected in 2028 could be delayed or lost. Not everyone sees it that way: Barclays argues that local pushback will make the buildout pricier rather than stall it. And the trade was already under pressure from high interest rates, heavy spending and questions about returns, with weak forecasts from chipmakers Qualcomm and Arm adding to Thursday's sell-off. The election gave investors another reason to worry.
South Africa's markets went in the opposite direction. The dollar fell the most in two months after the result, and gold surged on bets that Democrats would push to end the Iran war. Gold makes up about 20% of South African markets, so miners like Harmony, AngloGold Ashanti and Gold Fields rose, helping the JSE close 3.67% stronger on Thursday. Oil prices plunged 10% on the same hopes, which is particularly good for us because we depend on dollar-denominated fuel imports. Even Naspers jumped more than 10%, as investors moved out of US AI infrastructure and into Tencent and its peers.
But whether these gains last is another question. The new Congress is only sworn in on 3 January, and even then, Trump has said he could veto efforts to constrain his agenda. So tougher AI rules are far from guaranteed, yet investors have already wiped trillions off the market. Analysts say money could shift towards markets like ours, which have virtually no exposure to AI stocks, but warn that the crash will hurt local assets if it turns into a wider retreat from risk. The rand had already weakened again by Friday morning, to R16.55 to the dollar. For now, our gold miners have done well out of America's uncertainty. How long that uncertainty keeps working in our favour is anyone's guess.
