The sell-off on US stock exchanges following the elections wiped hundreds of billions of dollars of market value from major technology companies, driven by concerns that artificial intelligence development could slow down. After Democrats won in election campaigns where they advocated slowing AI development, shares in technology and artificial intelligence sector companies plunged.
The Nasdaq Composite, a technology-heavy index, closed the day down more than 5.5 per cent, losing an estimated 2.5 trillion dollars in market capitalisation, according to Dow Jones data. Other key US stock market indices also recorded significant losses, in their worst days since 2025. The S&P 500 fell 4.4 per cent by the close of trading, while the Dow Jones Industrial Average erased Wednesday's gains and closed down more than 3.4 per cent. The Nasdaq's decline now places it in so-called correction territory, where an index or company value falls at least 10 per cent below its recent peak.
Shares of companies heavily exposed to AI data centres, including key chip and semiconductor manufacturers, fell sharply on Thursday. Nvidia lost more than 9 per cent, wiping more than 400 billion dollars from the company's market value. AMD and Micron fell more than 17 per cent, Intel 10.3 per cent, and memory card maker SanDisk plunged more than 22 per cent. The Philadelphia Semiconductor Index, which tracks the performance of the 30 largest semiconductor manufacturing companies, fell more than 12 per cent. Shares in Elon Musk's SpaceX and Tesla fell 8 per cent and nearly 11 per cent respectively, wiping more than 300 billion dollars of market value from those companies on Thursday. The so-called Magnificent Seven technology companies, including Apple, Nvidia and Tesla, lost one trillion dollars in value in a single trading day.
Democrats in races across the US campaigned to slow the rush of data centres and AI. Dozens of measures aimed at limiting the development of these hubs, which are key to powering technology, appeared on ballots across the country. New Mexico Governor Gina Hinojosa campaigned strongly against data centres, promising a moratorium on new construction in the sector. Musk spent nearly 450 million dollars supporting Republican campaigns, including at least 45 million dollars to support Ken Paxton for a seat in the Texas Senate. Texas turned blue in Tuesday night's democratic tsunami.
Susannah Streeter, chief investment strategist at Wealth Club, said the sharp drop in the Nasdaq and S&P 500 is sending shockwaves to other markets. "Fresh panic around the AI trade has hit Wall Street hard," Streeter said. "Fears that the huge amounts invested in AI infrastructure may not deliver the returns investors expected are now colliding with the prospect of a rapid slowdown in data centre construction." Some investors are concerned that AI stocks may be in a bubble followed by a correction.
Greg Brockman, president and co-founder of OpenAI, said he believes everyone was surprised by the reaction to data centres and that more work is needed to involve communities. "A big part of our pivot this year has been realising 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 have to be in those communities," Brockman said at the WSJ Tech conference in Napa, California, on Wednesday night. Dina Powell McCormick, chair of Meta, stated that the industry needs to put more effort into selling AI as a good idea. "I think we need to double and triple the efforts in telling that story," Powell McCormick said at the same conference.
