A sell-off in technology stocks wiped out around $2.5 trillion in global market value on Thursday, sending major United State(US) indexes to their biggest single-day losses since April 2025 as investors reassessed the future of Artificial Intelligence (AI) investments following Democrat gains in the US midterm elections.
The decline spread to Asian markets on Friday, with South Korea’s Kospi falling nearly nine percent at the opening bell. The drop triggered a 20-minute trading halt on the exchange, following Thursday’s losses on Wall Street.
The Nasdaq Composite fell 5.52 percent on Thursday, closing more than 10 percent below its record high of October 6 and entering correction territory. The technology-heavy index recorded its steepest daily decline since April 2025, when President of US Donald Trump announced sweeping global tariffs.
The S&P 500 and Dow Jones Industrial Average also recorded their biggest one-day falls since April 2025. The Dow closed 1,833 points lower, reversing its 1,569-point gain from Wednesday’s post-election rally.
The reversal followed growing investor concerns over the impact of Democrat victories on the expansion of AI infrastructure, particularly in Texas, where major technology companies have committed funds to data centre projects.
Texas governor-elect Gina Hinojosa campaigned on a temporary halt to new data centre projects and the removal of certain tax incentives for businesses developing such facilities. Google, Meta, Oracle and OpenAI have made major investments in data centres across the state.
Shares of semiconductor manufacturers and companies supplying equipment and computing infrastructure for AI development faced selling pressure. Nvidia shares fell 9.3 percent on Thursday, erasing their gains for the year, while a closely watched semiconductor index dropped 12.3 percent, marking its worst session in around six and a half years.
Tesla and SpaceX shares also declined 11 percent and nine percent, respectively. The Nasdaq 100, which tracks major technology companies, fell 6.36 percent, recording its biggest daily decline since March 2020.
Companies providing computing capacity for AI development also recorded losses. CoreWeave shares fell around 10 percent, while Nebius dropped 15 percent. CoreWeave has lost 76 percent of its value since reaching a peak in June 2025, shortly after its public listing. Nebius shares have fallen 58 percent from their June peak this year.
Investors also sold shares in companies that missed earnings estimates or issued weaker forecasts. Qualcomm shares dropped 9.5 percent after the company reported lower-than-expected results on Wednesday and said that rising memory chip costs were affecting sales, following similar guidance from Intel last week.
The sell-off also pushed investors towards government bonds, with the yield on 10-year US Treasury bonds falling to 4.84 percent, its lowest level in two months.
Keith Lerner, chief investment officer at Truist Advisory Services, described the market movements as a knee-jerk reaction rather than a clear indication of how technology stocks will perform under Democrat control of Congress.
Investors have also struggled to assess whether restrictions on AI infrastructure development will create investment opportunities or expose companies to further risks.
On Wednesday, Amazon, Meta and Google shares gained as investors anticipated that restrictions on data centre spending could allow the companies to redirect funds towards other priorities and improve profitability.
However, sentiment shifted the following day as investors reconsidered whether the restrictions will ultimately hurt the sector.
The rapid expansion of data centres has also raised questions about whether technology companies are committing to more computing capacity than future demand will support.
Technology stocks have experienced repeated swings throughout the year, with further market activity expected around Anthropic’s planned initial public offering (IPO) and OpenAI’s expected listing next year.
