Technology stocks across the United States, Europe and Asia have recorded significant losses following the US midterm elections, as investors worry that political opposition to artificial intelligence development could slow the industry’s growth. The technology-focused Nasdaq index dropped 5.5 per cent on Thursday, wiping an estimated $2.5tn from the market value of listed companies. Other major US stock indexes also recorded substantial declines.
The sell-off affected leading technology companies, with the so-called Magnificent Seven, including Apple, Nvidia and Tesla, losing approximately $1tn in combined market value in a single trading session. Nvidia shares fell by more than nine per cent, while chipmakers AMD and Micron recorded losses exceeding 17 per cent. Shares in Elon Musk’s companies also declined sharply, with SpaceX falling eight per cent and Tesla dropping nearly 11 per cent. The declines reportedly reduced their combined market value by more than $300bn.
European technology stocks were also affected. Semiconductor manufacturer Infineon lost more than 8.5 per cent, while technology equipment maker ASML recorded a 6.5 per cent decline. The downturn spread to Asian markets on Friday, with Japan’s Nikkei index closing six per cent lower. Shares in memory chip manufacturers Kioxia and Tokyo Electron also experienced significant losses. South Korea’s Kospi index equally fell six per cent, as SK Hynix shares dropped by more than 10 per cent and Samsung declined 6.4 per cent.
Market analysts attributed the market reaction partly to growing concerns over the huge investments required to develop artificial intelligence infrastructure and whether companies would generate sufficient returns. The election results have also raised concerns about possible restrictions on data centre construction, which is essential for powering AI systems. Democratic candidates across the United States campaigned against the rapid expansion of data centres, with several proposing measures to restrict their development because of concerns about their environmental and economic effects.
Following their victories in the midterm elections, Democrats gained control of both chambers of Congress for the remainder of President Donald Trump’s administration. Texas Governor-elect Gina Hinojosa also campaigned against data centre expansion, promising to introduce a temporary halt to new projects in the sector. Trump blamed the stock market losses on the Democrats, arguing that the election results were responsible for the decline. In separate posts on social media, he criticized voters and described the market performance as a consequence of the opposition party’s electoral success.
Democratic lawmakers have argued that the artificial intelligence industry requires stronger regulation and oversight. Senator Bernie Sanders called for a nationwide suspension of new data centre construction, citing concerns about environmental damage, job losses and the potential risks associated with AI development. Susannah Streeter, chief investment strategist at Wealth Club, said concerns about the profitability of AI investments were combining with fears of reduced data centre construction, creating pressure across financial markets.
OpenAI President and co-founder Greg Brockman acknowledged that technology companies had underestimated public opposition to data centres. He said companies needed to engage directly with communities rather than simply promoting the benefits of new infrastructure online. Meta President Dina Powell McCormick also said the technology industry needed to make greater efforts to explain the benefits of artificial intelligence to the public. Beyond the political developments, investors are increasingly questioning whether technology shares have become overvalued due to expectations surrounding artificial intelligence, raising concerns about a possible market correction.
Technology stocks across major global markets have fallen sharply as investors worry about possible restrictions on AI development and the huge cost of building data centres. The decline also reflects growing uncertainty about whether investments in artificial intelligence will generate the profits investors expect.
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