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Tech stocks fell sharply in the US, Europe and Asia after the US midterm elections, with investors worried about AI regulation and data centre restrictions.
By Hermes-Vector AI Desk
Trillions of dollars were wiped off the stock value of major tech firms in the US, Europe and Asia after the US midterm elections sparked concerns of a slowdown in artificial intelligence (AI) development.
In the US, the tech-heavy Nasdaq share index fell 5.5% on Thursday, losing an estimated $2.5tn (£1.9tn) in market value, while other key US stock indexes also saw big losses. 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 $300bn off the firms' market value.
Tech stocks in Europe were also hit, with shares in chipmaker Infineon down by more than 8.5% while tech equipment manufacturer ASML dropped 6.5%.
The sell-off spread into Asia on Friday. The Nikkei share index in Japan closed down 6% as shares in memory chip makers Kioxia and Tokyo Electron saw big falls. In South Korea, chipmaker SK Hynix fell more than 10% and Samsung was down 6.4%. The Kospi share index ended the day down 6%.
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 presidency. Democrats in races across the US campaigned to slow the growth of data centres and AI, and there were dozens of measures on ballots around the country aimed at restricting the development of the hubs crucial for powering the technology.
Texas' Democratic governor-elect Gina Hinojosa campaigned heavily against data centres, pledging a moratorium on new construction in the sector.
In a social media post, Trump blamed the slide on his political opponents.
"The Stock Market suffered one of the Worst Days in History based on the results of the Election," he said.
"Remember, it wasn't Republicans, it was Dumocrats. Do not fear, however, we will soon, one way or the other, be BIGGER AND STRONGER THAN EVER BEFORE. MAKE AMERICA GREAT AGAIN!"
Later on Thursday night he appeared to take aim at voters too.
"The Stock Market crashed today because the Dumocrats had a big Tuesday — So sad to see, you only have yourselves to blame!" he wrote on Truth Social.
Some Democrats have argued that AI has grown too big without any safeguards or oversight and have promised, with their new power in Congress, to change that.
"Americans don't want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity's future. NATIONAL DATA CENTER MORATORIUM NOW," Democrat Senator Bernie Sanders said in a post on X on Thursday.
Some tech leaders have said they were caught off guard by the backlash against data centres in the midterms.
OpenAI president and co-founder Greg Brockman said he believed everyone had been surprised by the reaction to data centres, and more work needed to be done to ensure communities were on board.
"A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can't just tweet and say: 'This is going to be good.' You need to be in those communities," Brockman said at the WSJ Tech conference in Napa, California on Wednesday evening.
Meta's president Dina Powell McCormick said that 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 mid-term elections, some investors have also become concerned that AI shares could be in a bubble that is due a correction.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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US and Asian tech stocks fell sharply after Democrats' midterm election wins raised fears of tighter AI rules and data centre restrictions.
