AI stocks plunge after election, driving down US markets

Tech stocks lead US market slide as investors weigh impact of midterm election results on AI industry.

United States markets slid on Thursday, with losses in US chip and data centre-related stocks fuelling pressure on the technology sector following Democrats’ sweeping midterm election wins.

The tech-heavy Nasdaq was down 4.8 percent in midday trading, while the S&P 500 fell 3.6 and the Dow Jones Industrial Average slid 2.8 percent.

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US markets jumped on Wednesday following the midterm election, with Democrats’ sweeping wins signalling limits on policy shocks from a Congress at odds with the White House. Markets were also reassured by US President Donald Trump’s remarks that he would accept the election results.

Artificial intelligence (AI) stocks – which have driven much of the market’s growth – led the plunge in the tech sector that drove down markets on Thursday.

Of the 45 data centre ballot initiatives around the country, voters backed restrictions on most of them. According to Data Centers on the Ballot, 39 ballot measures to restrict AI were successful, while only one — in North Dakota — voted against restrictions.

UBS analysts estimated that potential construction pauses could put roughly 30 percent of planned US data centre capacity additions in 2028 at risk, according to the Reuters news agency.

“Yesterday, markets rallied on certainty as election results removed a layer of uncertainty. Today, portfolio managers and analysts are digging into the implications and adjusting expectations for potential political resistance to AI infrastructure, particularly at the state and local levels,” Michael Monaghan, portfolio manager of Founders 100 ETF, told Al Jazeera.