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Rachel Cran (New York, USA), Osmond Chia (Singapore)
On the 5th, major technology stocks in the US stock market collapsed. The opposition Democratic Party won an overwhelming victory in the U.S. midterm elections held on the 3rd, regaining control of both houses of Congress, sparking concerns that the development of artificial intelligence (AI) will slow down.
In the midterm elections, Democratic candidates who advocated for AI regulation won one after another.
On the 5th, the tech-heavy Nasdaq Composite Index fell more than 5.5%, wiping out an estimated $2.5 trillion (approximately 390 trillion yen) in market capitalization. Other major U.S. stock indexes also fell sharply, marking the worst one-day decline since 2025.
The plunge has added to broader concerns about whether the huge sums of money being poured into AI will yield sufficient returns in the future.
In Asian markets, stock prices of companies that manufacture semiconductors and related equipment that support AI fell on the morning of the 6th, and stock indexes with a high proportion of high-tech stocks plunged across the board.
Japan's Nikkei Stock Average fell 6% at the start of trading. Semiconductor memory giant Kioxia's stock price fell more than 12.6%, while rival Tokyo Electron's stock fell 9.5%.
In South Korea, semiconductor giant SK Hynix fell more than 11.5% and Samsung fell nearly 10%.
As the Korea Composite Stock Price Index (KOSPI) plunged more than 8.5%, a ``circuit breaker'' was activated to temporarily suspend trading to curb panic selling.
The Taiwan Weighted Index (TAIEX) also fell by more than 8.3%, and the stock price of semiconductor giant TSMC fell by nearly 8.5%.
Britney Nguyen, a semiconductor analyst at MarketWatch, said the decline signals "continued concerns" about the scale of investment in AI infrastructure.
Pressure to build data centers
In this election campaign, which took place across the United States, Democratic candidates appealed for policies to curb the rapid expansion of data center construction and AI development. It also proposed dozens of measures aimed at restricting the development of centers critical to the operation of AI technology.
Democrats eventually gained control of both houses of Congress. This leaves Democrats in control of Congress for the remainder of President Donald Trump's term.
Gina Hinojosa, a Democrat who was elected governor of Texas, strongly opposed data center construction during her campaign, pledging to suspend new construction.
President Trump has posted on social media that his political opponents are to blame for the decline in stock prices.
"The stock market faced one of its worst days in history following the (midterm) election results."
He added: "Listen, Democrats are to blame, not Republicans. But fear not. We will soon be bigger and stronger than ever anyway. Make America great again!"
Some Democrats say AI is being expanded too much without safeguards or oversight. He has also promised to use the new powers he gained in Congress in the midterm elections to change the status quo.
"Americans don't want big tech oligarchs destroying the environment, killing jobs, and threatening the future of humanity," Democratic Sen. Bernie Sanders said on social media on the 5th. "Data center construction across the country must immediately stop."
A “new panic” hits Wall Street
Stock prices of companies that rely heavily on AI data centers, including major chip makers, fell sharply on Wednesday, highlighting long-standing concerns among investors.
Semiconductor giant Nvidia's stock price fell more than 9%, and its market capitalization fell by more than $400 billion (approximately 63 trillion yen).
Other semiconductor manufacturers also fell sharply, with AMD and Micron's shares each dropping more than 17%. Intel fell 10.3%, while memory card maker SanDisk fell more than 22%.
The Philadelphia Semiconductor Stock Index, made up of 30 major semiconductor companies, fell more than 12%.
Shares of SpaceX, the space exploration company led by billionaire Elon Musk, fell 8%, and shares of electric vehicle giant Tesla Inc. fell nearly 11%. The combined market capitalization of both companies decreased by more than $300 billion (approximately 47 trillion yen) in just 5 days.
Mr. Musk has so far invested approximately $450 million (approximately 71 billion yen) to support Republican election campaigns. At least $45 million of that money went to support Republican Ken Paxton, who is running for U.S. Senate in the Republican stronghold of Texas. However, on the night of the 3rd, Democratic candidate James Talarico's victory became certain.
The market capitalization of the so-called ``Magnificent Seven'', including Apple, Nvidia, and Tesla, has lost a total of $1 trillion (approximately 158 trillion yen) in just one business day.
The trend of falling stock prices spread to other major American indexes as well. The S&P 500, an index of 500 major U.S. companies, closed down 4.4%. The Dow Jones Industrial Average lost more than 3.4% of its gains from the previous day.
The Nasdaq Composite Index has fallen particularly sharply, entering what market experts call a "correction phase." This refers to a situation where the stock index or corporate value has fallen by at least 10% from its recent high.
Susannah Streeter, chief investment strategist at investment firm Wealth Club, said the sharp decline in the Nasdaq Composite Index and S&P 500 index has spilled over into other markets.
"A new panic over AI stocks has hit Wall Street," Streeter said.
"Concerns that the huge sums of money spent on AI infrastructure will not yield the returns investors expect are combined with the prospect that data center construction may slow sharply."
Charu Chanana, chief investment strategist at investment bank Saxo, said while securing an advantage in AI remains a priority for Democrats and Republicans, greater scrutiny of data center approvals, environmental impacts and power prices could delay projects and increase costs.
"Supporting AI development is one thing; allowing infrastructure to grow at any cost and speed is another."
Some technology industry leaders say the widespread backlash against data centers in the midterm elections was unexpected.
Greg Brockman, president and co-founder of OpenAI, the U.S. company that developed the AI chatbot ChatGPT, said voters' reaction to the data center should have surprised everyone, and said more work is needed to gain community understanding.
"This year, we really changed our direction because we realized that we can't just post on social media and say, 'This is going to be great,' while we're in San Francisco and we're building infrastructure in Texas and Georgia and other places. We need to actually be in those places," Brockman said at a Wall Street Journal technology conference in Napa, Calif., on Tuesday night.
Meta president Dina Powell McCormick said the industry should do more to promote AI as a "good idea."
``I think we need to work to communicate this twice, even three times as much,'' McCormick said at a technical meeting on the 4th.
In addition to the direct impact of the midterm elections, some investors have expressed concerns that AI-related stocks are in a bubble and may need to be adjusted in the future.
(Additional interview: Lily Jamali)
(English article: Major tech stocks plunge as US midterms add to fears of AI slowdown)
