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A sweeping Democratic victory in the U.S. midterm elections has sent technology stocks lower worldwide. Investors fear stricter regulation of artificial intelligence could slow infrastructure development and undermine the rally that has supported market growth this year. Democrats won seven Senate seats, at least 39 House seats and five gubernatorial races in states traditionally dominated by Republicans, AnewZ reported, citing Reuters.
The Nasdaq Composite, which is heavily weighted toward technology companies, fell 5.56%. It was the index’s steepest decline in 19 months.
Nvidia shares fell more than 9%, wiping more than $400 billion from the company’s market value. AMD and Micron each lost more than 17%.
Selling pressure spread to Asian markets on Friday. Japan’s Nikkei fell about 6% at the start of trading, while South Korea’s Kospi dropped more than 8%, prompting a temporary trading halt.
Taiwan’s main stock index also fell sharply. Major chipmakers, including Samsung, SK Hynix and TSMC, suffered heavy losses.
Investors are questioning whether the vast sums being invested in artificial intelligence will deliver the expected returns, given the Democratic Party’s current stance on the technology.
The election results also pointed to widespread discontent with President Donald Trump. One source of dissatisfaction was his decision to start a war in Iran, which led to a sharp rise in fuel prices. Democrats also won in traditionally Republican-led states such as Texas, South Carolina, Kansas and Iowa.
AI infrastructure growth faces regulatory uncertainty
Melissa Brown, global head of investment decision research at SimCorp, said investors were weighing the possibility that some newly elected members of Congress and governors would seek to slow the development of AI infrastructure. While a complete halt to that development appeared unlikely, she said any slowdown could cause concern, as AI growth has largely depended on the rapid construction of supporting infrastructure.
In Texas, governor-elect Gina Hinojosa defeated Republican Greg Abbott, who had served three terms as governor. Hinojosa pledged to halt construction of new data centers in a state that is one of the fastest-growing markets for AI server installations.
Democrats in Congress have backed legislative initiatives aimed at shielding consumers from rising electricity costs linked to data centers and requiring independent testing of AI systems. The party’s victories are expected to strengthen opponents of new data centers at the heart of the AI boom. The facilities are increasingly drawing complaints from nearby residents over noise and their heavy use of water and electricity.
President Donald Trump’s only public appearance on Thursday was to sign a document aimed at declaring the White House’s Oval Office a national monument. Since returning to office last year, Trump has decorated the office with gold trim, new sculptures and paintings.
Speaking to reporters two days after a major Republican defeat in the midterm elections, Trump said the administration had scored many victories in the office. He did not address the stock market decline or concerns about possible restrictions on AI development.
Seated behind his desk, Trump pointed to a red cap bearing the word “VETO” in large letters. He said there had been some mistakes in the office, but that the administration had scored major victories. Trump said the office would be designated a national monument and that no one would be allowed to change, destroy or remove it, or interfere with it to build something of a different shape.
Trump’s recent public appearances have also focused on renovations at the White House. On Monday, he discussed changes to the reflecting pool at the Lincoln Memorial, and on Wednesday he showed reporters the ballroom being built at the White House. The ballroom is being constructed on the site of the historic East Wing, which he had ordered demolished.
Democrats could increase their Senate majority
As of Thursday, the Senate races in Alaska and Mississippi had not been decided. Democrats were narrowly ahead in both states. If the party wins both races, its number of Senate seats could rise to 56, while Republicans would hold 44.
When the new Congress convenes in January, Democrats are expected to use their expanded powers to investigate the Trump administration, his family and allies, as well as seek concessions on major legislative initiatives. A Senate majority would also allow them to block Trump’s nominees, including appointments to the U.S. Supreme Court if a vacancy arises.
Until then, Republicans will control Congress. Lawmakers must pass a measure to fund the federal government beyond Dec. 11. Republicans could use the lame-duck session, which will continue until Democrats take power, to advance conservative policy priorities.
