US midterm results trigger AI‑related stock sell‑off

The US midterm elections on Thursday saw Democrats win full control of Congress, prompting a sharp sell‑off in AI‑linked shares on the Nasdaq.

Investors reacted to the prospect of tighter regulation after leading Democrats campaigned against the rapid expansion of data centres that underpin artificial‑intelligence growth. Concerns that new legislation could curb the sector added to a broader scepticism about the AI boom.

The AI rally, sparked by OpenAI’s ChatGPT launch in late 2022, had driven massive inflows into chip makers, networking firms, data‑centre operators and AI developers, with Goldman Sachs forecasting AI investment to reach $1 trillion by 2026.

Public unease has also grown, fuelled by AI researchers warning of safety risks and a May Gallup poll showing 71 % of Americans would oppose a data‑centre in their community. Democratic figures such as Texas Senate winner James Talarico and governor‑elect Gina Hinojosa have called for clearer laws and, in Hinojosa’s case, a moratorium on new data‑centre construction.

With Democrats now able to challenge the president’s technology agenda, the market is watching for potential legislation that could limit the industry’s expansion, a development that contributed to the recent decline in tech stock values.

Source: BBC News. Photo: Rafael Minguet Delgado / Pexels.