The immediate impact was severe across major technology names. Nvidia shares declined by 9.3%, while AMD and Micron dropped 17.3% and 17.5%, respectively. Microsoft, Broadcom, Tesla, and SpaceX also posted significant losses, ranging from 3.6% to 10.8%. Companies specializing in AI computing power, including Nebius, Iren, and CoreWeave, were hit particularly hard, with declines between 10% and 17%. Bloomberg calculated that twenty-two Asian billionaires lost a combined $18 billion in net worth during the selloff. In contrast, defensive sectors and dividend-paying stocks saw relative outperformance as investors rotated away from high-growth tech assets.
The primary catalyst for the market jolt was the outcome of Tuesday’s midterm elections, which saw Democrats secure control of Congress and numerous statehouses. Analysts at Capital.com noted that the “AI trade was already on shakier foundations” due to recent earnings that undershot growth expectations, suggesting a slowing pace of AI spending. The election results introduced new political risks, specifically regarding the construction of new AI data centers. Kyle Rodda, senior financial market analyst at Capital.com, stated that investors are “rushing to the exits” on AI trades as they contemplate potential moratoriums on data center construction.
Local opposition to AI infrastructure has intensified, with at least 46 AI data center projects across 20 U.S. states facing scrutiny or restrictions between January 2024 and May 2026. These projects represent more than $170 billion in announced investment. Dozens of ballot measures in ten states passed this week that would place restrictions on data center construction, creating a fragmented regulatory landscape that complicates national AI expansion plans. Macquarie analysts argued that the political shift was not merely a rebuke of the current administration but a long-term institutional change, noting that partisan tensions have weakened independent oversight since the 1990s.
Despite the sharp drop, early trading signals suggest the immediate panic may be subsiding. Nasdaq 100 futures rose 1.18% ahead of the New York open, while S&P 500 futures gained 0.24%. However, the broader market remains volatile. Friday’s trading saw mixed signals, with Dow futures declining 0.9% (approximately 500 points) following a stronger-than-expected October jobs report from the Labor Department, while Nasdaq-100 futures rebounded 1.5%. Nvidia and Cloudflare emerged as early winners in this mixed environment, indicating a potential differentiation within the tech sector rather than a uniform recovery.
The coming weeks will test the durability of the AI investment cycle. Market participants are now focused on how the new congressional majority will legislate on technology infrastructure and whether local zoning laws will effectively halt the “war of attrition” in data center buildouts. While some analysts suggest a “self-correcting” dynamic in U.S. politics could lead to bipartisan compromises, the immediate commercial consequence is a heightened risk premium for AI-heavy firms. The next significant catalyst will be the formal introduction of regulatory bills in Congress and the implementation of state-level data center restrictions.
