Global stock markets have plunged after investors reacted to concerns that US midterm election results could slow the rollout of artificial intelligence infrastructure and increase regulation of the sector.
Global stock markets have tumbled after investors sold technology shares amid fears that the US midterm elections could slow the development of artificial intelligence (AI).
The sell-off began in the US before spreading to Asia and Europe, wiping trillions of dollars from the value of major technology companies.
The tech-heavy Nasdaq index fell 5.5 per cent on Thursday (05.11.26), losing an estimated $2.5 trillion in market value and entering correction territory, defined as a fall of at least 10 per cent from a recent high.
The so-called Magnificent Seven technology companies, including Apple, Nvidia and Tesla, lost around $1 trillion in value in a single trading session. Nvidia shares fell more than nine per cent, while Tesla dropped almost 11 per cent.
Shares in Elon Musk’s SpaceX also fell eight per cent, with the combined decline in Tesla and SpaceX wiping more than $300 billion from their market values.
The market reaction followed the midterm elections, in which Democrats won control of both the US Senate and House of Representatives.
Democratic candidates had campaigned against the rapid expansion of data centres and called for tougher regulation of the AI industry.
Investors are also questioning whether the vast sums being spent on AI infrastructure will ultimately generate sufficient returns.
Dan Coatsworth, head of markets at AJ Bell, said investors were concerned about the amount being spent on AI with “no clear idea of when, or whether, there will be payback”.
He added: “The AI story has all been about speed, and now there is a danger of it moving to a lower gear, and some of the wheels falling off.”
The sell-off continued in Asia, with Japan’s Nikkei index closing six per cent lower.
South Korea’s Kospi fell six per cent after dropping more than eight per cent at one point, triggering a circuit breaker. Shares in SK Hynix fell more than 10 per cent.
European markets also opened lower, with the UK’s FTSE 100 down almost two per cent and Germany’s Dax falling 2.4 per cent.
The market losses came despite the Nasdaq remaining around 4.6 per cent higher than at the start of the year.
OpenAI president Greg Brockman said technology companies had been surprised by the backlash against data centres and needed to work more closely with local communities.
Brockman said: “A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities.”
Global stock markets plunge amid AI slowdown concern
