The Nasdaq index dropped 5.5% on Thursday, erasing over $2tn in value, after US midterm election results raised expectations of stricter regulation on artificial intelligence datacentres. The tech-heavy index entered correction territory, falling more than 10% from its recent peak, with chipmakers SanDisk and Western Digital down 22% and 17% respectively. The VIX volatility index surged 61% to levels last seen during the Iran war, reflecting widespread investor anxiety.
Analysts said the Democratic party’s gains in gubernatorial races and voter rejection of datacentre projects in local ballots point to a slowdown in AI infrastructure expansion. The Dow Jones and S&P 500 also fell sharply, while Asian markets followed suit. European stocks lost early gains, with the FTSE 100 closing down 0.4%.
Tech sector leaders now face the prospect of increased regulatory scrutiny and slower datacentre buildout, with market participants warning of ongoing volatility. The shift from optimism about AI’s potential to concerns over its costs and regulatory risks is driving uncertainty for investors and operators.
Executives in regulated industries should monitor US regulatory developments and market signals closely, as further restrictions or policy changes could affect technology investment plans and risk management strategies.
