AI stocks slide worldwide as US midterm results stoke regulation fears

The sell-off that began on Wall Street on Thursday ran through Asia and into Europe on Friday, after Democratic victories in both chambers of Congress pushed investors to reassess the regulation of artificial intelligence and of the data centres on which it depends. The Nasdaq 100 closed 6.3 per cent lower, according to NBC News, and 6.4 per cent according to The Independent; The Guardian put the fall in the Nasdaq Composite at 5.5 per cent, its worst session in 19 months, while the S&P 500 shed 4.4 per cent. About $3tn was wiped off major US equity markets, of which roughly $2.5tn came from Nasdaq 100 constituents alone, according to Lenta.ru.

La Vanguardia reports that several Democratic candidates promised during the campaign to slow the construction of data centres and that Senator Bernie Sanders has called for a moratorium, with about 40 per cent of US data-centre capacity awaiting deployment planned in states whose newly elected governors promised to halt or pause building, according to Cleanview data. NBC News reports that a Democratic Congress could tighten scrutiny of AI infrastructure projects, causing delays and additional costs.

Asia absorbed the heaviest losses. Japan's Nikkei 225 fell about 6 per cent, closing below 60,000 for the first time since May, according to The Independent, in its worst week since 2020, NBC News reported. South Korea's Kospi dropped more than 8 per cent in early trading, triggering a temporary market-wide trading halt, before closing 6 per cent lower, El Correo reported. Among individual stocks, SK Hynix fell 13 per cent, SoftBank 11 per cent, Samsung Electronics 6 per cent and TSMC 5 per cent, La Vanguardia reported; in Europe, Siemens Energy lost 5 per cent. The FTSE 100 opened between 1.4 and 1.6 per cent lower, Germany's Dax 1.5 to 1.6 per cent, France's Cac 40 1.2 to 1.3 per cent and Spain's Ibex about 1 per cent. Wall Street's VIX jumped 61 per cent to its highest level since the early weeks of the Iran war, The Guardian reported.

What happens next turns partly on the AI companies themselves. La Vanguardia, citing Reuters, reports that Anthropic intends to list within weeks at a valuation of $1.5tn, but that investors now doubt it can approach that figure and that a delay is under consideration. Nasdaq futures pointed higher on Friday morning, La Vanguardia reported, while NBC News described broader US futures as mixed. Most indices remain up for the year: The Guardian notes that the Nasdaq Composite is still 4.6 per cent higher than at the start of January, even though it is more than 10 per cent below its peak.