Global tech stocks crash as U.S. vote fuels AI fears

Global technology stocks tumbled on November 5 following U.S. midterm election results and growing worries over massive artificial intelligence spending. The Nasdaq-100 plunged 6.36%, wiping out about $2.53 trillion in market value. The Nasdaq Composite dropped 5.52%, while the S&P 500 fell 4.36% and the Dow Jones Industrial Average lost 3.44%.

Market Impact

Semiconductor companies suffered heavy losses as the Philadelphia Semiconductor Index dropped 12.2%. Nvidia shares fell about 9%, while AMD and Micron Technology both lost more than 17%. The downward pressure spread to Asian markets on Friday, where South Korea's KOSPI fell 6.02%, Japan's Nikkei 225 dropped 5.96%, and Taiwan's TAIEX declined 4.51%.

Indian Markets

Indian stock markets bucked the global trend with a sharp rally on November 6. The Sensex jumped 1,718 points to close at 81,028.02, marking a 2.17% gain, while the Nifty 50 rose 2.01% to reach 25,030.35. Foreign portfolio investors bought Indian equities worth ₹14,974.68 crore on November 5, while domestic institutional investors sold shares worth ₹10,444.54 crore.

Regulatory Hurdles

Election outcomes in states like Texas, Georgia and Ohio raised the prospect of tighter scrutiny and potential restrictions on new data-centre projects. Macquarie Research noted that stricter rules on power connections, backup generators, water use, zoning and taxation could delay approvals and increase costs. However, Macquarie added that already approved data-centre capacity could become more valuable due to delayed fresh supply.

Financial Health

Despite financing and regulatory concerns, chip demand remains strong. AMD reported that its data-centre revenue surged 97% year-on-year to $8.55 billion in the September quarter. The company expects segment revenue to grow about 50% sequentially in the December quarter and projects overall revenue growth of over 80% in 2027.

Context

Large artificial intelligence infrastructure projects require massive amounts of electricity and water, making them frequent subjects of local zoning debates and environmental reviews. Shifts in political control can often lead to policy changes that directly affect how quickly large tech developments receive permits.