The Democratic Party has secured a major victory in the US midterm elections, raising concerns among investors that the government could increase scrutiny of AI companies and their operations. Investors are particularly worried about the possibility of stricter regulations on data centre construction or a slowdown in the pace of new projects. Data centres are large facilities housing thousands of computers and servers required to operate AI systems.
The impact of these concerns became evident as markets opened on Thursday. According to news agency Reuters, the technology-heavy Nasdaq Composite Index plunged 5.5 per cent. This marked its biggest single-day decline since the 'Liberation Day' sell-off in April 2025. Meanwhile, the combined market capitalisation of major Nasdaq 100 companies fell by $2.5 trillion.
AI-related stocks extended their losses for the second consecutive day. The sell-off also affected semiconductor manufacturers, with the index tracking chipmaking companies falling nearly 12 per cent to its lowest level in more than six months. Shares of AI-related company CoreWeave also declined by 10 per cent.
Nasdaq Falls 12% From October Record High
The Nasdaq Composite has now fallen approximately 12 per cent from its record high recorded on October 6. In stock market terminology, a decline of 10 per cent or more from a recent peak is known as a 'correction'. The Nasdaq has therefore entered correction territory.
Since mid-October, the index has recorded five instances of declines exceeding 500 points. Market experts are increasingly concerned about a potential slowdown in data centre construction. Higher interest rates have already made it difficult for smaller AI companies to raise funds. The possibility of stricter regulations could further complicate their financial position and expansion plans.
Trump Blames Democrats for Stock Market Decline
US President Donald Trump also reacted to the sharp market decline. In a social media post, he claimed that the election results had caused the market to experience one of the worst days in its history. Trump blamed the Democrats for the downturn.
He also said that the market decline had reduced the value of people's 401(k) retirement accounts, while expressing confidence that the United States would soon return to a strong position.
In his post, Trump targeted the Democrats by referring to them as 'Dumocrats'.
For now, investors remain concerned about how strictly AI companies could be regulated in the coming months and how potential restrictions might affect data centre construction plans. Although the actual impact of any regulatory changes remains unclear, fears of tighter oversight have already triggered a sharp sell-off in AI stocks, contributing to one of the biggest single-day market value losses among major technology companies.
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