US shares suffered a sharp sell-off after investors assessed whether Democratic control of Congress following the midterm elections could slow the construction of data centres powering artificial intelligence services.
Technology stocks bore the brunt of the losses. The tech-heavy Nasdaq Composite fell 5%, or 1,285 points, in early-afternoon trading, while the S&P 500 dropped 3.9%, or 300 points. The Dow Jones Industrial Average was down nearly 3%, shedding 1,586 points.
The falls put US equities on course for their worst session since April 2025, when President Donald Trump announced tariffs on countries around the world, according to Joe Maher, a markets economist at Capital Economics.
The reversal came a day after the Dow recorded its biggest gain of the year, as election results initially appeared to reduce uncertainty over control of Washington.
Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley, said investors were concerned about a potentially slower expansion of the data-centre network under a Democratic-controlled Congress.
“Even though the market rallied Wednesday after the midterm elections, there were visible cracks in the AI ecosystem, and they widened on Thursday amid investor concerns about a potentially slower data center buildout with Democrats in charge of Congress,” he said.
Opposition to data centres has grown in communities where the facilities are planned. Market watchers believe the Democrats’ electoral gains could strengthen opponents and delay the rollout of new sites.
Such a slowdown would threaten companies investing billions of dollars in the infrastructure needed to support artificial intelligence, while relying on widespread adoption of the technology.
AI shares hit as investors question the boom
The sell-off intensified concerns that heavy investment in artificial intelligence may have created a stock market bubble, with company valuations rising beyond what their underlying businesses can justify.
“Whether the midterms shock turns out to be the catalyst that derails the AI equity boom remains to be seen, but it strengthens our sense that the boom is in its final innings,” Mr Maher said.
Nvidia shares fell 7.5%, making the chipmaker the biggest drag on the S&P 500, after losing 3.2% on Wednesday. Advanced Micro Devices dropped 14.6%, while CoreWeave, which rents access to artificial intelligence chips through the cloud, fell 12.1%.
Trump Media & Technology Group, owner of the Truth Social platform, also suffered further losses. Its shares fell 11%, following a decline of almost 25% on Wednesday, leaving the stock at about 4 US dollars and at its lowest level since it was publicly listed in March 2024.
Elsewhere, Brent crude rose 2.6% to 97.11 US dollars a barrel, recovering much of its near-9% fall the previous day. Uncertainty remained over the war with Iran and when the global energy industry could return to normal.
