Major tech stocks experienced a significant sell-off following the US midterm elections, wiping out over $2 trillion in market capitalization. The Nasdaq composite closed down more than 5.5%, marking its worst day since 2025. The decline is attributed to investor concerns about potential crackdowns on artificial intelligence development spurred by Democratic wins in several races, including the Texas governor's seat. Democratic candidates campaigned on slowing the development of AI data centers, raising fears about the future of AI infrastructure investment. Shares in companies heavily reliant on AI data centers, such as Nvidia, AMD, Micron, and Intel, fell sharply, with Nvidia alone losing over $400 billion in market value. Elon Musk’s companies, SpaceX and Tesla, also saw substantial declines, losing over $300 billion combined, despite Musk’s significant investment in Republican campaigns. The so-called “magnificent seven” tech companies collectively shed a trillion dollars in value. Susannah Streeter, chief investment strategist at Wealth Club, stated the sell-off was sending “shockwaves into other markets,” fueled by “fresh panic over the AI trade.” The Nasdaq’s decline has placed it in correction territory, indicating a fall of at least 10% from its recent high. The S&P 500 fell by 4.4%, and the Dow Jones Industrial Average closed down more than 3.4%. While AI contributed to a 3.4% annual economic growth in the July-September quarter, investors are increasingly questioning whether the substantial investments in AI will yield returns. The impact of the rout extends to average Americans through their retirement investment portfolios.
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