The result of the US midterm elections triggered a stock market crash on Thursday, as investors feared a sharp slowdown in artificial intelligence development following Democratic victories.
The Nasdaq fell more than 5.5% on Thursday, wiping out about $2.5 trillion in market capitalization in a single session, according to Dow Jones data. The S&P 500 declined 4.4%, and the Dow Jones Industrial Average dropped over 3.4%, marking one of the worst days for US markets since 2025. The Nasdaq has now entered so-called « correction » territory, meaning it has lost at least 10% from its recent peak.
The stock market debacle followed Democratic wins in the midterm elections, where several candidates made limiting the expansion of artificial intelligence a central campaign issue. Dozens of measures aimed at restricting data center construction appeared on ballots across the country. In Texas, Gina Hinojosa, elected governor, notably promised a moratorium on any new construction in this sector.
The stocks most exposed to AI infrastructure suffered the heaviest losses. Nvidia’s share price dropped more than 9%, representing over $400 million in lost market capitalization. Semiconductor manufacturers AMD and Micron both fell more than 17%, Intel by 10.3%, while memory card maker SanDisk plummeted over 22%. The Philadelphia Semiconductor Index, which tracks the thirty largest companies in the sector, lost more than 12% on the day.
Elon Musk’s companies were not spared: SpaceX lost 8% and Tesla nearly 11%, amounting to over $300 million in combined value. Musk had invested nearly $450 million in Republican campaigns, including at least $45 million supporting Ken Paxton for the Texas Senate seat, a state ultimately won by the Democrats. In total, the seven major US tech companies, including Apple, Nvidia, and Tesla, lost one trillion dollars in value in a single trading day.
According to Susannah Streeter, chief investment strategist at Wealth Club, the severity of the correction reflects a dual market anxiety. « A new panic around the artificial intelligence sector has hit Wall Street hard, » she said. « Fears that the huge sums invested in AI infrastructure will not generate the expected returns now collide with the prospect of a sharp slowdown in data center construction. »
Some industry leaders acknowledge underestimating popular rejection. Greg Brockman, president and co-founder of OpenAI, admitted that the reaction to data centers surprised the entire industry. « From San Francisco, you can’t just post a message saying it will be fine. You have to be present in these communities, » he said at a conference in Napa, California. Dina Powell McCormick, president of Meta, agreed, stating the sector must redouble efforts to convince public opinion of the benefits of artificial intelligence.
This correction comes amid broader questions about the valuation of companies in the sector, with some analysts questioning for several months whether markets have formed a speculative bubble around artificial intelligence.
Respond to the article
Be the first to comment on this article.