Technology shares fell across global markets as investors pulled back from companies tied to artificial intelligence, according to the BBC. The sell-off came after Democratic candidates who had campaigned for slower AI expansion and tighter control over data centre construction made gains in the US midterm elections. The BBC reported that the Nasdaq recorded its worst trading day in 19 months, while the Financial Times described the scale of the retreat as a deep sell-off.
Bloomberg framed the decline around concentration risk, noting how heavily the market had come to depend on a small group of AI-linked companies. CNBC reported that Nasdaq futures later rebounded after the rout spread into Asian trading.
Why it matters
The drop shows how sensitive global equity markets have become to any signal that AI spending might slow. Investors have spent months pricing in rapid growth for chipmakers, cloud providers and data centre operators. A political shift that questions that growth path is enough to move billions in value.
The BBC's coverage also ties the market reaction to the midterm results. Several Democratic candidates argued during the campaign for limits on how quickly AI systems are deployed and how fast data centres are built. Their success has led some investors to bet that the buildout could face new obstacles, according to The Guardian.
Musk's political spending and its fallout
Elon Musk, who runs Tesla and SpaceX and has invested heavily in AI, put almost $450m into Republican campaigns, the BBC reported. That figure, which the BBC said is more than anyone has spent in a single election cycle, included millions directed at Ken Paxton, the Republican who lost the Texas Senate race. Texas hosts the headquarters of both Tesla and SpaceX.
The state's governor-elect, Democrat Gina Hinojosa, has called for a halt on approvals for new data centres until at least January. Musk responded on X on Wednesday, writing that data centres in space now look appealing. Shares in Tesla and SpaceX were among those that declined on Thursday, according to the BBC.
Peter Bardenfleth-Hansen, a former close colleague of Musk at Tesla, told BBC Radio 4's Today programme that the past few days had been costly for his old boss. He said Musk was paying a price for being so closely linked with Trump.
A market built on one theme
The speed of the decline reflects how much of the market's recent gains rested on AI. Bloomberg's analysis pointed to concentration risk, meaning that when a handful of large companies drive index performance, a change in sentiment toward those firms can drag the whole market down. The Financial Times reported that the sell-off deepened through the session.
The political dimension adds a new variable. Until now, the main questions for investors were chip supply, computing capacity and corporate spending plans. Now state-level decisions on data centre approvals, and federal rhetoric around AI, are part of the calculation. The BBC noted that the midterm campaigns put the pace of AI development and data centre construction directly before voters.
For companies building large computing facilities, a pause in approvals in a state as large as Texas would matter. Texas has become a major hub for data centre development, and both Tesla and SpaceX are headquartered there. Hinojosa's call for a moratorium until January, if carried through, would create uncertainty for projects already planned or under way.
What to watch
Attention now turns to whether the pullback continues or stabilises. CNBC reported that Nasdaq futures recovered somewhat after the downturn hit Asian markets, suggesting some buyers returned. Investors will also watch whether other states follow Texas in scrutinising data centre construction, and whether the incoming Congress acts on AI oversight. For Musk, the next test is whether the political backlash affects Tesla and SpaceX beyond a single trading session.
