US tech stocks tumbled on Thursday in chaotic trading on worries that Democrats' sweeping victories in midterm races across the US will herald a slowdown in the AI boom. The Nasdaq 100 dropped as much as 6.4 per cent, but had eased its decline to around 4.5 per cent by late morning in New York.
Chip stocks, which have been among the year's big winners, were under heavy pressure, with the Philadelphia semiconductor index down 8 per cent. Markets initially rallied in the wake of the stunning win by Democrats against Donald Trump's Republicans in Tuesday's midterms, but sentiment on Wall Street has soured as analysts and fund managers fret about the trajectory of the AI infrastructure build-out.
"With the blue wave, investors fear that peak [AI capital spending] is behind us," said Charles-Henry Monchau, chief investment officer at Swiss private bank SYZ Group Investors.
Candidates who campaigned against data centres won key races in states including Texas, Ohio and Georgia. Investors now worry that these newly elected politicians will hit the brakes on AI infrastructure development, upending Wall Street's expectations for vast spending on chips, servers and facilities that have powered stocks to record highs this year.
Source: Financial Times Companies · Summarized by HeadlinesBriefing