Tech Giants Lose Trillions in Market Value as US Midterms Spark AI Slowdown Fears

POLICY WIRE — Washington, USA — Hundreds of billions of dollars in market valuation have evaporated from leading technology companies following a massive market rout. The US midterm election results have heightened anxieties regarding a cooling pace for artificial intelligence growth.

Following Democratic victories in key races where campaign messaging centered on the need to throttle AI expansion, shares across the technology and AI-specific sectors saw a sharp decline.

The tech-heavy Nasdaq composite index finished the session falling over 5.5%, erasing an estimated $2.5tn in total market capitalization according to Dow Jones data. Other major U.S. equity indices also experienced losses marking their worst performance days since 2025.

This aggressive sell-off compounds existing skepticism over whether the massive capital expenditures currently flowing into AI will yield expected returns.

Democratic candidates across the country ran on platforms opposing the rapid expansion of data centers and AI infrastructure. Additionally, dozens of ballot measures nationwide sought to place restrictions on the development of the hubs essential for powering these technologies.

Texas governor-elect Gina Hinojosa led a vocal campaign against data center development, promising a halt on any new construction projects within the sector.

Shares in firms deeply integrated with AI infrastructure, including vital chipmakers and semiconductor producers, plummeted on Thursday, reflecting mounting investor unease.

Nvidia shares saw a slide exceeding 9%, stripping more than $400bn from the company’s market worth.

Other semiconductor entities faced similar fates, with AMD and Micron both falling by more than 17%. Intel shares declined 10.3%, while memory manufacturer SanDisk crashed by over 22%.

The Philadelphia Semiconductor Index, which monitors 30 of the largest semiconductor-related firms, dropped by more than 12%.

Equity in Elon Musk’s ventures SpaceX and Tesla also tanked, dropping 8% and nearly 11% respectively, which collectively removed over $300bn in market value.

Musk contributed nearly $450m to Republican campaigns, including $45m for Ken Paxton in the Texas Senate race, but Texas shifted to blue on Tuesday night.

In total, the ‘magnificent seven’ tech giants, including Apple and Tesla, lost a trillion in value over the single trading day.

The downturn impacted all major US indices. The S&P 500 fell 4.4% by the close, while the Dow Jones Industrial Average erased its Wednesday gains to close down over 3.4%.

The Nasdaq decline was so significant that some market analysts are now labeling it a correction, as the index sits at least 10% below its recent peak.

Susannah Streeter, chief investment strategist at Wealth Club, noted that the steep drop in the Nasdaq and S&P 500 sent shockwaves through the markets.

“Fresh panic over the AI trade has hit Wall Street hard,” she stated, adding that fears of massive AI investment failing to deliver anticipated returns are now clashing with the possibility of a major slowdown in data center construction.

Some industry leaders appeared caught off guard by the electoral backlash against data centers. OpenAI president and co-founder Greg Brockman stated he was surprised by the reaction and emphasized that more effort is required to gain community buy-in.

A lot of shift over this year has really to realise from San Francisco trying to build in Texas, and other places, you cannot just tweet and say this going to be good. You need to be in those communities, Brockman said during the WSJ conference in Napa on Wednesday evening.

Meta president Dina Powell McCormick suggested the industry must invest more into promoting the benefits of AI. “I think we need to double and triple down on telling the story,” she told the WSJ conference.

Beyond the immediate political fallout of the midterms, some investors are concerned that AI shares may be part of a bubble nearing a burst.

Reporting by Policy-Wire (PW)