Tech Stocks Plunge Following US Midterm Elections and AI Backlash

UPDATE - follow-up to Major tech stocks plunge as US midterms add to fears of AI slowdown: Hundreds of billions of dollars in market value vanished from major tech firms during a stock market rout triggered by US midterm election results and growing fears of an artificial intelligence slowdown. Democratic wins in races across the country followed campaigns focused on slowing down the spread of data centres and artificial intelligence.

Market Losses

The tech-heavy Nasdaq composite index closed down by more than 5.5%, losing an estimated $2.5 trillion in market capitalisation according to Dow Jones data. The S&P 500 index fell by 4.4%, and the Dow Jones Industrial Average dropped more than 3.4%. Shares in companies heavily exposed to AI data centres and chip manufacturing fell sharply on Thursday. Nvidia shares slid more than 9%, losing over $400 billion in value. AMD and Micron both dropped by more than 17%, Intel fell 10.3%, and SanDisk plunged more than 22%. The Philadelphia Semiconductor Index dropped by more than 12%. Elon Musk's companies SpaceX and Tesla fell 8% and nearly 11% respectively, wiping out more than $300 billion in market value on Thursday after Musk spent nearly $450m backing Republican campaigns.

Industry Reaction

Texas governor-elect Gina Hinojosa campaigned heavily against data centres, pledging a moratorium on new construction. Susannah Streeter, chief investment strategist at Wealth Club, noted that fresh panic over the AI trade hit Wall Street hard as investors worried that vast sums poured into AI infrastructure might not deliver expected returns. Tech leaders admitted to being caught off guard by the backlash. OpenAI president and co-founder Greg Brockman stated at the WSJ Tech conference in Napa, California, that the industry needs to be present in local communities rather than just tweeting about benefits. Meta president Dina Powell McCormick added that the industry must work harder to convince the public that AI is beneficial.

Context

This market drop reflects growing tension between rapid technology expansion and local concerns over resource use by large data centres. Stock market corrections occur when major indexes fall significantly below recent highs following sudden shifts in investor confidence.