Democratic victory in US hits tech stocks: investors reconsider AI prospects
The Democratic Party's victory in the US midterm elections triggered a sell-off in technology assets on global markets. Investors fear that the shift in political balance in Washington will lead to stricter regulation of artificial intelligence and new restrictions on data center construction.
This was reported by Bloomberg and Financial Times on November 4.
Amid initial voting results, futures on the tech-heavy Nasdaq 100 fell 2.1% overnight, while contracts on the S&P 500 were down about 1.2%. Later, American futures recouped some of the losses, but concerns about the prospects for AI investment continued to weigh on the market.
The selling spread to Asian stock markets as well. The most pressure was felt by companies involved in semiconductor manufacturing, data center equipment, and financing of AI projects.
According to Financial Times, Japan's Nikkei 225 index declined, and shares of SoftBank, a major investor in artificial intelligence, fell up to 10% during trading. Shares of South Korean memory chip makers Samsung Electronics and SK Hynix also lost value.
The main concern for investors is the potential slowdown in the massive construction of data centers in the US. Investment in such infrastructure has been a key driver of demand for advanced processors, server equipment, cooling systems, and electricity in recent years.
After the Democrats' victory in Congress, market participants expect increased oversight of technology corporations. However, the results of gubernatorial elections could have an even greater practical impact, since state and local authorities make a significant portion of decisions regarding permits for large computing facilities.
Investors are paying special attention to Texas — one of the key US hubs for AI infrastructure development.
As Business Insider notes, Democrat Gina Inohosa won the gubernatorial election in the state, having campaigned for a moratorium on new data center construction.
Her stance has raised concerns about the future of large infrastructure projects. Potential restrictions could affect building permits, access to electricity, and development of power grids.
However, the candidate's victory does not automatically mean a moratorium will be imposed. For now, it is a matter of political risks that investors have started to factor into asset prices.
Increased federal oversight is also not guaranteed. President Donald Trump retains veto power, so Democrats will not be able to pass legislative restrictions without sufficient support in Congress.
An additional factor in the decline of tech stocks were doubts about the return on massive AI investments. According to Financial Times, the Nasdaq 100 has already lost almost 10% from its October peak, as investors increasingly scrutinize technology companies' spending on infrastructure development.
Thus, the US election results amplified existing pressure on the technology sector. The key question for investors now is whether political changes will lead to real restrictions on data center development and whether tech companies can maintain planned investment rates in artificial intelligence.
Sources: Bloomberg, Financial Times, Business Insider
