More than $3.2tn was wiped off the US stock market as fears grip investors that the Democratic Party's election victory this week could derail the artificial intelligence investment boom and trigger tighter regulation of data centres.
The sell-off triggered heavy losses across major indices yesterday. The Nasdaq tech index fell 5.5%, the Dow Jones Industrial Average dropped 1,833.06 points or 3.44%, and the S&P 500 lost 4.36%. Memory chip makers led the decline, with SanDisk slumping 22% and both Micron and AMD losing 17% of their value. Nvidia, the chip giant, fell over 9% on the Dow Jones.
The rout extended into Asia-Pacific markets today. Japan's Nikkei stock index slumped by almost 6%, its worst drop since 7 April 2025 during the tariff panic known as 'liberation day'. South Korea's KOSPI fell 6.7% and Taiwan's TAIEX dropped 4.5%. Christopher Forbes, head of Asia and Middle East at CMC Markets, described the market action as 'a bit of a disaster', telling Reuters that clients faced margin calls and losses as 'a whole policy and six-year structural shift' emerged around AI cooling and data centre approvals.
Kyle Rodda, senior financial market analyst at Capital.com, called it a 'brutal sell-off' as investors worried about what a Democrat-controlled Congress could mean for tech regulation and the overall AI boom. The sell-off came after an already disappointing earnings season for the markets, with results from major technology companies falling short of growth expectations and signalling that the pace of AI spending is slowing down. Analysts also pointed to public opposition to data centres as a factor in regulatory uncertainty.
For UK investors with holdings in technology stocks or index funds tracking US markets, the volatility represents a significant shift in sentiment away from artificial intelligence-focused investments that have driven gains for much of the past year.