Tech stocks plunge as Democratic midterm victories intensify fears over AI expansion

Technology stocks plunged across the United States on Thursday after Democratic victories in the midterm elections prompted investors to reassess the political outlook for artificial-intelligence development and the data centres that support it. The tech-heavy Nasdaq Composite closed down more than 5.5%, according to BBC News, wiping an estimated $2.5tn from its market capitalisation. The S&P 500 fell 4.4%, while the Dow Jones Industrial Average lost more than 3.4%.

The Nasdaq’s decline placed the index in what market watchers describe as correction territory, at least 10% below its recent high. The scale of the losses reflected both political concerns and existing doubts about the financial returns from the enormous sums being committed to AI infrastructure. Democratic candidates had campaigned in races across the country on slowing the expansion of data centres and artificial intelligence, while dozens of ballot measures sought to restrict development of the facilities needed to power the technology.

Democrats won control of both the Senate and House of Representatives in Tuesday’s elections, according to the BBC, giving the party control of Congress for the remainder of President Donald Trump’s presidency. In Texas, Democratic governor-elect Gina Hinojosa campaigned against data centres and pledged a moratorium on new construction. AI-exposed chipmakers were among the hardest hit.

Nvidia fell more than 9%, reducing its market value by more than $400bn, while AMD and Micron each dropped more than 17%. Intel declined 10.3% and SanDisk fell more than 22%. The Philadelphia Semiconductor Index, which tracks 30 major semiconductor companies, fell more than 12%.

The so-called “Magnificent Seven” technology companies, including Apple, Nvidia and Tesla, collectively lost about $1tn in a single trading day, the BBC reported. Tesla fell nearly 11%, while SpaceX and Tesla together lost more than $300bn in market value. Elon Musk had spent almost $450m supporting Republican campaigns, including at least $45m backing Ken Paxton’s Texas Senate campaign, but Texas turned Democratic in the election.

Trump blamed his political opponents for the decline. In a social-media post quoted by the BBC, he said the market had suffered because of the election results and argued that Republicans were not responsible. He predicted the country would become “BIGGER AND STRONGER THAN EVER BEFORE.” Democratic Senator Bernie Sanders said Americans did not want technology companies “wrecking the environment, gutting jobs and threatening humanity’s future” and called for a national data-centre moratorium.

The industry’s concerns extend beyond regulation: Wealth Club strategist Susannah Streeter said fears that AI infrastructure spending might not generate expected returns were colliding with the prospect of slower data-centre construction. Some technology executives acknowledged that the political backlash had caught the sector off guard. OpenAI president Greg Brockman said companies needed to work directly with communities rather than simply promoting projects online.

Meta president Dina Powell McCormick also said the industry needed to do more to present AI as beneficial. The reports do not establish whether new federal restrictions will follow, but they show that election results have already changed investors’ assessment of the sector’s risks.