Global tech stocks plunge after US midterm elections fuel AI slowdown fears, Digi Mart USA News: Trillions of dollars have been wiped off the stock value of major technology firms in the United States, Europe and Asia after the US midterm elections sparked concerns about a slowdown in artificial intelligence (AI) development.
In the United States, the tech-heavy Nasdaq index fell 5.5% on Thursday, losing an estimated $2.5 trillion (£1.9 trillion) in market value, while other key US stock indexes also posted big losses. Investors appear worried about tougher regulation of AI after Democratic candidates expressed opposition to the data centers needed to power the technology.
The share declines came on top of broader concerns about whether the huge amounts being spent on AI will pay off. The sell-off in US stocks on Thursday meant the so-called Magnificent Seven tech companies, including Apple, Nvidia and Tesla, shed a trillion dollars in value in a single trading day.
Nvidia shares slid more than 9%, and other chipmakers also suffered, with AMD and Micron both dropping by more than 17%. Shares in Elon Musk’s companies SpaceX and Tesla also plunged, falling 8% and nearly 11% respectively and shaving more than $300 billion off the firms’ market value.
Musk had spent nearly $450 million backing Republican campaigns, including at least $45 million in support of Ken Paxton for the Texas Senate seat, but Texas turned blue in the Democratic wave on Tuesday night.
Tech stocks in Europe were also hit. Shares in chipmaker Infineon fell more than 8.5%, while tech equipment manufacturer ASML dropped 6.5%.
The sell-off spread to Asia on Friday. The Nikkei index in Japan closed down 6%, as shares in memory chipmakers Kioxia and Tokyo Electron saw big falls.
In South Korea, chipmaker SK Hynix fell more than 10% and Samsung was down 6.4%, while the Kospi index ended the day down 6%.
MarketWatch chips analyst Britney Nguyen said the falls mark a “continuation of worries” over the level of spending on AI infrastructure.
Democrats across the United States campaigned to slow the growth of data centers and AI, and dozens of measures on ballots around the country aimed to restrict the development of the hubs crucial for powering the technology. Democrats won both the US Senate and House of Representatives in Tuesday’s midterms, taking control of Congress for the rest of President Donald Trump’s term.
Texas Democratic governor-elect Gina Hinojosa campaigned heavily against data centers, pledging a moratorium on new construction in the sector.
In a social media post, Trump blamed the slide on his political opponents, saying, “The Stock Market suffered one of the Worst Days in History based on the results of the Election.” Later on Thursday night, he appeared to direct criticism at voters as well, writing on Truth Social that “The Stock Market crashed today because the Dumocrats had a big Tuesday.”
Some Democrats have argued that AI has grown too large without adequate safeguards or oversight and have promised, with their new power in Congress, to change that. Democratic Senator Bernie Sanders said in a post on X on Thursday: “Americans don’t want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity’s future.
NATIONAL DATA CENTER MORATORIUM NOW.”
Susannah Streeter, chief investment strategist at Wealth Club, said the steep sell-off in US stocks had sent shockwaves into other markets. “Fresh panic over the AI trade has hit Wall Street hard,” she said.
“Fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on are now colliding with the prospect of a sharp slowdown in data centre construction.”
Some tech leaders said they were caught off guard by the backlash against data centers in the midterms. OpenAI president and co-founder Greg Brockman said he believed everyone had been surprised by the reaction and that more work needed to be done to ensure communities were on board.
Speaking at the WSJ Tech conference in Napa, California, on Wednesday evening, he said, “You can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities.”
Meta president Dina Powell McCormick said the industry needed to put more effort into selling AI as a good idea. “I think we need to double and triple down on telling the story,” she told the WSJ conference.
Alongside the immediate impacts of the US midterm elections, some investors have also become concerned that AI shares could be in a bubble due for a correction.
