Nasdaq loses $2.5 trillion as US midterms spark AI slowdown fears

The Nasdaq Composite fell more than 5.5 percent on Friday, erasing roughly $2.5 trillion in market value and marking the steepest decline for the index since 2025. The S&P 500 slipped 4.4 percent, while the Dow Jones Industrial Average dropped 3.4 percent, sending the market into a correction phase that analysts say could last until the next earnings cycle.

The rout was driven by a wave of losses in companies tied to artificial intelligence. Nvidia shares fell 9 percent, wiping over $400 billion from its market cap. AMD and Micron both dropped more than 17 percent, and Intel slid 10.3 percent. Memory-card maker SanDisk fell 22 percent. Tesla and SpaceX, both led by Elon Musk, fell 11 and 8 percent respectively, together shaving more than $300 billion from their combined valuations. In total, the so-called “magnificent seven” tech firms lost a trillion dollars in a single trading day.

Asian markets mirrored the downturn. The Nikkei 225 fell 6 percent, with memory-chip maker Kioxia down 12.6 percent and Tokyo Electron 9.5 percent. South Korea’s SK Hynix fell 11.5 percent and Samsung 10 percent, pushing the Kospi index below the 8.5 percent threshold that triggers a circuit breaker. Taiwan’s Taiex dropped 8.3 percent, and TSMC fell 8.5 percent. MarketWatch chips analyst Britney Nguyen said the sell-off signals a “continuation of worries” over the scale of AI infrastructure spending.

The sell-off follows a Democratic victory in the U.S. midterm elections that gave the party control of both the Senate and the House. Democrats campaigned on curbing the growth of data centres and AI, with dozens of ballot measures aimed at restricting new data-centre construction. Texas Democratic governor-elect Gina Hinojosa pledged a moratorium on new data-centre projects, a stance echoed by Senator Bernie Sanders who called for a national data-centre moratorium. Trump blamed the slide on his political opponents, tweeting that the market had suffered “one of the worst days in history” because of the election results.

Investor sentiment has shifted as concerns mount that the massive capital poured into AI may not deliver the expected returns. The Philadelphia Semiconductor Index fell 12 percent, and analysts warn that tighter scrutiny of data-centre approvals could delay projects and raise costs across the industry. OpenAI president and co-founder Greg Brockman said the backlash surprised the company, noting that community engagement is now essential for future infrastructure plans.

For founders and operators, the market reaction underscores the need to balance ambition with regulatory realities. Investors will likely demand clearer evidence of return on AI investments and may scrutinise the environmental and community impacts of new data-centre projects. The next few months will test whether the technology sector can navigate a political environment that increasingly prioritises oversight and sustainability, and whether the industry can maintain the pace of innovation that has driven its recent growth.