Tech firms suffered a bloodbath Friday as investors tracked a collapse on Wall Street fuelled by fears that Democrats will ramp up regulation of the AI industry following their blowout victory in this week’s US midterm elections.
Trading boards were a sea of red in early business, with Seoul and Tokyo taking the brunt of the selling as traders fled to the hills amid uncertainty about a sector that had pushed stock markets to record highs just five months ago.
While the historic “blue wave” in Tuesday’s vote had been initially welcomed on hopes it could put pressure on President Donald Trump to wind down his war against Iran, fears about the impact on the AI buildout soon came to the fore.
Data centres have faced broad opposition from US
Data centres have faced broad opposition from US voters across the political spectrum, and many midterm winners have pledged to put the brakes on such projects.
Analysts said investors were also spooked by a call from progressive US Senator Bernie Sanders for a national moratorium on their building.
The results compounded already heightened fears about the hundreds of billions firms had pumped into the sector and when they would see a return, while the recent spike in borrowing costs also fuelled concerns about their financial position.
The eye-watering rally in many companies’ valuations had also caused unease on trading floors.
Michael Hewson at MCH Market Insights said investors
Michael Hewson at MCH Market Insights said investors were selling up because of “concerns that we might see greater opposition to AI buildout plans, with the results in Texas prompting concerns that politicians in the state might target Elon Musk’s Tesla and SpaceX due to his support for Trump”.
New York’s Nasdaq plunged 5.5 percent in its worst day — percentage-wise — since April last year when Trump unveiled his wide-ranging global tariffs. The S&P 500 tanked more than four percent and the Dow more than three percent.
Bloomberg said the Philadelphia Semiconductor Index had collapsed around 16 percent this week, putting it on course for its worst run since April last year.
Trump blamed the collapse on the Democrats, writing
Trump blamed the collapse on the Democrats, writing on Truth Social: “The Stock Market crashed today because the Dumocrats had a big Tuesday — So sad to see, you only have yourselves to blame! President DONALD J. TRUMP.”
The heavy selling continued in Asia.
Seoul briefly plunged almost nine percent before ending six percent lower with chip giant SK hynix off more than 10 percent while rival Samsung was 6.4 percent down.
The Kospi more than doubled between the end of December and mid-June, when it hit a record, and has since then lost almost 50 percent.
