Tech Shares Slide Worldwide as AI Fears Follow US Midterms
Tech shares lost trillions of dollars in value across the US, Europe and Asia, and investors appear to be reading the US midterm result as a threat to AI growth. They appear worried about tougher regulation of the data centres that power the technology.
Chipmakers under pressure
Chipmakers also suffered. Nvidia slid more than 9%, while AMD and Micron each lost more than 17%. In Europe, Infineon dropped more than 8.5%. In South Korea, SK Hynix fell over 10% and Samsung 6.4%. Japanese memory chip makers Kioxia and Tokyo Electron also saw big falls.
Wider indexes suffered as well. The Nasdaq fell 5.5% on Thursday, which cost it an estimated $2.5tn (£1.9tn) of market value, and other major US indexes recorded big losses. The so-called magnificent seven, a group that includes Apple, Nvidia and Tesla, lost a trillion dollars together in one session.
The equipment maker ASML fell 6.5% in Europe. On Friday Japan's Nikkei and South Korea's Kospi each closed 6% down. Shares in SpaceX and Tesla, both Elon Musk firms, fell 8% and nearly 11%, wiping more than $300bn off their combined value.
Two worries at once
The new worry is political. Democratic candidates opposed data centres during the campaign, and investors seem to fear stricter rules on AI as a result.
It lands on an older doubt about whether the huge spending on AI will pay off. MarketWatch chips analyst Britney Nguyen called the fall a "continuation of worries" over spending on AI infrastructure. Susannah Streeter, chief investment strategist at Wealth Club, tied the panic to fears that returns may not match investors' hopes which are now colliding with the prospect of a sharp slowdown in data centre construction. Some investors also think AI shares could be in a bubble that is due a correction.
Data centres on the ballot
Democrats across the country campaigned to slow the growth of data centres and AI. Dozens of ballot measures aimed to restrict the sites. The party won both the Senate and the House on Tuesday, giving it control of Congress for the rest of Donald Trump's presidency.
In Texas, the Democratic governor-elect Gina Hinojosa campaigned heavily against data centres and pledged a moratorium on new construction. Musk had put nearly $450m behind Republican campaigns, including at least $45m for Ken Paxton's Senate bid in the state. Texas still turned blue.
Trump, Sanders and the industry
Trump blamed his opponents in a social media post, saying the market "suffered one of the Worst Days in History based on the results of the Election". Later that night he appeared to blame voters too. Senator Bernie Sanders, a Democrat, called on X for a national moratorium on data centres.
Some tech leaders said the backlash caught them off guard. OpenAI's Greg Brockman said at the WSJ Tech conference in Napa, California, that firms building in places such as Texas and Georgia must be present in those communities. Meta's president Dina Powell McCormick said the industry needs to put more effort into selling AI as a good idea.
Source: BBC News