After Midterms, Major US Tech Stocks Plunge as AI Restrictions Spark Fears of Slowdown

Markets suffer sharp losses

The Nasdaq Composite, a technology-heavy index, closed down more than 5.5%. Dow Jones data put the loss in market value at an estimated $2.5tn (£1.9tn). Other major US indexes also recorded steep falls, their worst days since 2025.

In Asia, technology indexes fell on Friday morning as shares in businesses supplying chips and other AI equipment dropped. South Korea’s SK Hynix declined more than 11.5%, while Samsung fell nearly 10%.

Election concerns weigh on AI

Democrats campaigned in races across the US for limits on data centre growth and AI. Dozens of ballot measures sought to restrict development of the facilities that power the technology.

Texas governor-elect Gina Hinojosa, a Democrat, campaigned against data centres and promised a pause on new construction in the sector. MarketWatch chips analyst Britney Nguyen described the market reaction as a “continuation of worries” about AI infrastructure spending.

Chipmakers and firms slide

Companies with significant exposure to AI data centres fell sharply on Thursday. AMD and Micron each lost more than 17%, Intel dropped 10.3%, and SanDisk fell more than 22%.

SpaceX and Tesla shares, both associated with Elon Musk, fell 8% and nearly 11%. Their combined market value declined by more than $300bn. The so-called Magnificent Seven, which includes Apple, Nvidia and Tesla, lost a trillion dollars in value in one trading day.

Investors question future returns

The Nasdaq’s drop put it in what market watchers call correction territory, meaning an index or company value is at least 10% below a recent high. Some investors are also concerned that AI shares may be in a bubble approaching a correction.

Wealth Club chief investment strategist Susannah Streeter said the sell-off in the Nasdaq and S&P 500 was sending shockwaves through other markets. She said doubts about returns from AI infrastructure were meeting expectations of a sharp slowdown in data centre construction.

OpenAI president and co-founder Greg Brockman said the reaction to data centres had surprised people and that more work was needed to gain community support. Meta president Dina Powell McCormick said the industry needed to do more to present AI positively.