The technology-focused Nasdaq index fell 5.5% on Thursday, marking its sharpest one-day decline since April 2025. The sell-off was triggered by concerns that the Democratic Party’s victory in the U.S. midterm elections could lead to stricter oversight of artificial intelligence, particularly in the construction of data centers.
The Nasdaq Composite has already lost nearly 12% from its record level on October 6. Thursday marked the second consecutive day of selling in artificial intelligence stocks, while since mid-October the index has recorded five declines of more than 500 points.
The Nasdaq 100 index, which includes the largest companies in the broader technology index, fell 6.4%. The market capitalization of the companies included in it shrank by $2.5 trillion. The losses intensified questions over whether pressure on technology stocks could make it more difficult to finance and list companies linked to artificial intelligence.
Data centers have become a political risk
The sell-offs show that investors are beginning to factor in local opposition to the construction of data centers. The main concerns are related to pressure on the power grid and water supplies, Reuters reports. A potential slowdown in new projects could affect companies whose growth depends on the rapid expansion of computing infrastructure.
Texas is one of the world’s leading regions for data center construction due to the availability of energy resources, relatively inexpensive land and business-friendly policies. Following the election, however, the position of newly elected Governor Gina Inohosa increased uncertainty surrounding future projects.
„We will have laws to protect Texans, and we need to stop what we are doing with data centers while we have these protections,“ Inohosa said in an interview with CNN.Her statement signals that the expansion of data centers could be subject to new rules at the state and local levels. The possibility of such restrictions is one of the reasons investors are reassessing the high valuations of technology companies.
Sources: bta.bg, marketscreener.com