TL;DR

Technology shares fell sharply across the US, Europe and Asia after Tuesday’s US midterm elections, in which Democrats who campaigned against data centres won control of both houses of Congress. The Nasdaq dropped 5.5% on Thursday 5 November, erasing an estimated $2.5tn (£1.9tn) of value, and the selling reached Asia on Friday. Investors appear to fear tighter regulation of AI on top of doubts that the huge spending on it will pay off.

How far the falls went

The so-called magnificent seven lost a combined trillion dollars in a day. Nvidia fell more than 9%, while AMD and Micron each dropped over 17%. Tesla fell almost 11% and SpaceX 8%, together losing more than $300bn. In Europe, chipmaker Infineon fell over 8.5% and ASML 6.5%. On Friday Japan’s Nikkei and South Korea’s Kospi both closed 6% lower, with SK Hynix down more than 10%.

The politics behind it

The BBC reports that Democrats in many races ran on slowing data centre and AI growth, and dozens of ballot measures sought to restrict new sites. Texas governor-elect Gina Hinojosa has pledged a moratorium on new construction. Senator Bernie Sanders called on X for a national moratorium. President Trump blamed Democrats, and later voters, for the slide.

Industry figures admitted surprise. OpenAI president Greg Brockman said the company had learned it cannot build infrastructure in other states from San Francisco without winning over local communities. Susannah Streeter of Wealth Club said worries that AI infrastructure will not earn back its cost were meeting the risk that data centre construction slows sharply.

Why it matters for UK readers

The sell-off is also weighing on AI fundraising: Reuters reports that investors now doubt the timing of Anthropic’s IPO. In our view, the bigger signal for the UK is political. Local opposition to data centres has now shaped a US national election, while campaigners hold coordinated protests across Europe, including London. UK ministers pursuing data centre growth should expect the same arguments at home. For investors, it adds to concerns we covered in Oxford Economics’ recession warning.

Looking Forward

Democrats now hold Congress for the remainder of Trump’s presidency. Until they act, the question is whether this is a one-off repricing or the start of a deeper correction in AI valuations, which some investors already feared was overdue.