A day after the Democrats easily won the midterm elections, shares of Elon Musk’s SpaceX fell along with IT and AI firms in general.
The tech-heavy Nasdaq Composite stock index, which had dropped by more than 5% at one point in early trade, was pulled down by those losses.
Following Democratic victories in important data center states like Texas, the market has been responding to potential increased scrutiny of data center building and the artificial intelligence (AI) sector.
Quick Fact
| Detail | Information |
|---|---|
| What Happened | Major technology stocks experienced significant declines amid growing AI investment concerns. |
| Where | Wall Street, United States |
| When | Thursday trading following the US midterm elections |
| Key Companies | Tesla, SpaceX, Nvidia, AMD, Intel and Micron |
| Key Figures | Elon Musk, Greg Brockman and Dina Powell McCormick |
| Current Situation | Technology shares face pressure from investor uncertainty and data centre concerns. |
| Why It Matters | Market uncertainty could affect AI investments and future data centre construction. |
Some tech executives have said after the election that they need to communicate better about data centers and the advantages of artificial intelligence.
Texas was turned blue by the Democratic wave on Tuesday night, despite Musk having spent close to $450 million supporting Republican races, including at least $45 million in favor of Ken Paxton for the Texas Senate seat.
Gina Hinojosa, the next governor of Texas, ran a vigorous anti-data center campaign, promising to halt new building in the industry.
AI Fears Trigger Major Market Selloff
The Philadelphia Semiconductor Index has dropped by 10%, while Intel and Nvidia shares have dropped by over 7% and over 9%, respectively.
The S&P 500 index fell by 3.8% at midday as a result of the market declines.
Wealth Club’s chief financial strategist, Susannah Streeter, stated that other markets were being affected by the sharp sell-off on the Nasdaq and S&P 500.Wall Street has been severely affected by fresh fear over the AI trade, she claimed.
The pushback against data centers during the midterm elections, according to several IT leaders, took them by surprise.
Tech Leaders Address AI Backlash
Greg Brockman, president and co-founder of OpenAI, stated that he thought the response to data centers had taken everyone by surprise and that more effort needed to be done to make sure communities were on board.
At the WSJ Tech conference in Napa, California on Wednesday night, Brockman stated, “A lot of our shift this year has really been realizing that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities.”
AI Bubble Fears Shake Investor Confidence
She stated, “I think we need to double and triple down on telling the story,” during the WSJ conference.
In addition to the immediate effects of the US midterm elections, some investors are worried that AI shares may be in a bubble that has to be corrected.
