Technology and artificial intelligence stocks suffered sharp losses, dragging down the Nasdaq Composite Index, which fell more than 5% in early trading — following a major Democratic victory in the US midterms.
The market sell-off was driven heavily by investor anxiety Potential federal and state-level restrictions on artificial intelligence infrastructure and data center construction.
Companies strongly associated with AI and hardware development are facing immediate downward pressure. Chipmakers experienced significant drops, with AMD falling nearly 17%, Micron falling over 20%, Intel sliding 18% and Nvidia more than 10% over five days. The Philadelphia Semiconductor Index similarly fell over 13%.
Elon Musk’s companies were particularly hard hit. The shares of SpaceX fell more than 7%, and Tesla fell over 9%. Musk had spent nearly $450 million to support Republican campaigns, including at least $45 million supporting candidates in Texas.
Tech leaders admitted that the industry has been caught off guard by the intensity of political and community backlash against data center expansion. Speaking at the WSJ Tech Conference in Napa, California, OpenAI president and co-founder Greg Brockman noted that tech companies can no longer simply try to build massive infrastructure hubs without deeply engaging local populations.
“You can’t just tweet and say, ‘This is going to be good.’ You have to be in those communities,” Brockman said.
Meta President Dina Powell McCormick echoed these sentiments, stressing that the tech sector must redouble its efforts to convey the tangible benefits of AI to the public. In addition to the immediate political fallout, some investors are also increasingly concerned that valuations across the AI sector are entering an overheated bubble ripe for correction.