US and Asian tech stocks fell sharply after Democrats' midterm election wins raised fears of tighter AI rules and data centre restrictions.
By Hermes-Vector AI Desk
US markets slid on Thursday, led by a selloff in the artificial intelligence (AI) sector following Democrats' sweeping midterm election wins. The tech-heavy Nasdaq was down 4.8 percent in midday trading, while the S&P 500 fell 3.6 and the Dow Jones Industrial Average slid 2.8 percent.
AI stocks led the plunge in the tech sector. Of the 45 data centre ballot initiatives around the country, voters backed restrictions on most of them. According to Data Centers on the Ballot, 39 ballot measures to restrict AI were successful, while only one — in North Dakota — voted against restrictions.
UBS analysts estimated that potential construction pauses could put roughly 30 percent of planned US data centre capacity additions in 2028 at risk, according to the Reuters news agency.
"Yesterday, markets rallied on certainty as election results removed a layer of uncertainty. Today, portfolio managers and analysts are digging into the implications and adjusting expectations for potential political resistance to AI infrastructure, particularly at the state and local levels," Michael Monaghan, portfolio manager of Founders 100 ETF, told Al Jazeera.
"We're seeing that concern reflected in the selloff across semiconductors and hyperscalers."
Data centre operators and neocloud companies were slumping, with CoreWeave down over 12 percent and Nebius Group down nearly 17 percent. Semiconductor stocks such as AI market leader Nvidia fell by 8.2 percent, Micron by nearly 14 percent and Intel by 6.8 percent in midday trading.
AI server manufacturer Dell dropped nearly 13 percent. Other tech giants were also in negative territory, with Amazon falling 2 percent and Facebook and Instagram's parent company, Meta, down 3.8 percent.
SpaceX shares were down 9.5 percent, while Tesla, also owned by billionaire Elon Musk, fell over 11 percent.
Gold prices hit a two-week high on Thursday. Spot gold jumped just over one percent to $4,115 per ounce.
Asian tech stocks fell sharply on Friday, with Seoul and Tokyo leading losses after a Wall Street sell-off driven by fears of tighter AI regulation following Democrats' US midterm election victory.
New York's Nasdaq plunged 5.5 percent in its worst day -- percentage-wise -- since April last year when Trump unveiled his wide-ranging global tariffs. The S&P 500 tanked more than four percent and the Dow more than three percent.
Seoul plunged almost nine percent at one point, with chip giant SK hynix off 10 percent while rival Samsung was eight percent down. Tokyo dived seven percent as Kioxia and SoftBank gave back more than 10 percent, with Advantest more than eight percent lower. TSMC's seven-percent drop dragged Taipei's Taiex around eight percent lower.
Hong Kong, Shanghai, Sydney and Singapore were all down more than one percent, with Wellington and Manila also in the red.
Trump blamed the collapse on the Democrats, writing on Truth Social: "The Stock Market crashed today because the Dumocrats had a big Tuesday - So sad to see, you only have yourselves to blame! President DONALD J. TRUMP."
The midterm election results and voter-backed restrictions on data centres have raised concerns about the future of AI infrastructure investment and the financial position of companies that have poured hundreds of billions into the sector.
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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