Tech stocks slump worldwide after US midterms raise AI slowdown fears
Chipmakers and AI firms lost hundreds of billions of dollars in value as investors weighed new political pressure on data centres.
Key points
- Nasdaq Composite closed down more than 5.5%, according to Dow Jones data
- Asian chip stocks fell sharply, and Kospi triggered a trading circuit breaker
- Democrats won control of Congress and campaigned against data centres and fast AI growth
- Nvidia, AMD, Micron and Tesla were among firms with steep share falls on Thursday
Tech stocks fell sharply in the United States and Asia this week, wiping out hundreds of billions of dollars in market value. According to BBC News, the sell-off followed the US midterm elections, which raised worries that artificial intelligence development could slow down.
The tech-heavy Nasdaq Composite closed down by more than 5.5%. Dow Jones data cited by the BBC put the loss at an estimated $2.5tn, or £1.9tn. Other major US indexes also posted large losses, their worst days since 2025.
Read also: Nasdaq suffers worst day in 18 months on AI regulation fears
Asian chip shares hit hard
Trading in Asia also fell sharply on Friday morning. Japan’s Nikkei 225 was 6% lower in early trading, with memory chip maker Kioxia down more than 12.6%.
In South Korea, SK Hynix dropped more than 11.5%, and Samsung fell nearly 10%. The Kospi index lost more than 8.5%, which triggered a circuit breaker, a tool that pauses trading to limit panic selling. Taiwan’s Taiex fell more than 8.3%, and TSMC lost nearly 8.5%.
Market analyst Britney Nguyen of MarketWatch described the moves as a continuation of worries about how much is being spent on AI infrastructure.
Political pressure on data centres
Across the US, Democratic candidates pushed for limits on the expansion of data centres and AI. Dozens of ballot measures aimed at restricting the building of these facilities were also on voting papers.
Democrats won both the Senate and the House of Representatives. Their wins give them a majority in both chambers, which they will hold through the remainder of Trump’s time in office. Texas governor-elect Gina Hinojosa, a Democrat, campaigned heavily against data centres and promised a moratorium on new construction in the sector.
Senator Bernie Sanders called for a national data centre moratorium in a post on X on Thursday. Trump blamed his political opponents for the market fall in a social media post.
Wall Street and Europe follow
On Thursday, shares in AI-linked firms fell sharply in Europe and New York. Infineon dropped more than 8.5% and ASML fell 6.5% in European trading. Nvidia shares slid more than 9%, and AMD and Micron each fell more than 17%.
The Philadelphia Semiconductor Index fell more than 12%. Shares in Elon Musk’s companies also dropped, with SpaceX down 8% and Tesla down nearly 11%. The S&P 500 fell 4.4%, and the Nasdaq Composite entered correction territory, meaning it closed at least 10% below its recent high.
Analysts say investors are worried that large AI spending may not produce the returns they expected. Charu Chanana of Saxo said stricter reviews of data centre approvals could delay projects and raise costs.
Industry response
Some tech leaders said they were surprised by the backlash. OpenAI president Greg Brockman said at a WSJ Tech conference in Napa, California, that companies need to engage with local communities. Meta president Dina Powell McCormick said the industry must do more to present AI as a good idea.
Related: US stocks climb as Democrats win midterm control
Frequently asked questions
Why did tech stocks fall after the US midterms?
Investors reacted to Democratic wins in the midterms, which followed campaigns to slow AI and data centre growth. Concerns about whether large AI spending will pay off added to the sell-off.
How much value did the Nasdaq lose?
The Nasdaq Composite closed down more than 5.5%. According to Dow Jones data cited by the BBC, it lost an estimated $2.5tn in market value.
What is a circuit breaker in stock trading?
A circuit breaker temporarily halts trading to curb panic selling. The Kospi index in Seoul triggered one after falling more than 8.5%.
Sources
This article was written with the help of AI from reports by the outlets listed above. See our Editorial Policy. Spotted a mistake? Tell us.
