Investors on Wall Street continued to rotate out of tech stocks on Thursday, reversing a brief post-election rally as the Nasdaq Composite fell into correction territory.
The tech-heavy index had declined 4.17 per cent as of 10.43am ET. The S&P 500 slid 2.68 per cent and the Dow Jones Industrial Average fell 880 points, or 1.65 per cent, erasing roughly half of the previous session's gains that followed a stunning Democratic midterm sweep.
AI-related stocks also tumbled as investors considered the question of whether Democratic control of both chambers of the US Congress would lead to greater oversight and regulation of the data centre buildout.
The chip bellwether Nvidia declined 7 per cent, while Broadcom tumbled 8 per cent.
Shares in neocloud companies also fell, with CoreWeave and Nebius tumbling 11 and 15 per cent, respectively. Iren shed 17 per cent, and Oracle declined 7.63 per cent.
Investors fear the Democrats' sweep in the midterms that put them in control of Congress could delay the multitrillion-dollar AI buildout at a time when the industry is already facing intensifying backlash over the financing needed for infrastructure and its energy demands.
“The theme we are watching most closely is AI scrutiny. We anticipate more congressional hearings on who pays for the power-hungry buildout,” Vijay Valecha, chief investment officer at Century Financial, wrote in a note.
Voters nationwide overwhelmingly rejected data centres in this week's elections. As of Thursday, voters opted for decisions that would restrict data centres in 39 of 40 measures with complete counts, according to Redbud Consulting.
The so-called hyperscalers at the heart of the AI buildout, drawing the most scrutiny over Big Tech's spending, also declined.
Amazon fell 2.27 per cent, Apple 0.64 per cent, Meta 3.32 per cent and Microsoft 2 per cent. Elon Musk's companies Tesla and SpaceX declined 9.17 and 7.26, respectively, continuing their rout from the previous trading session.
A stunning upset in Texas's gubernatorial race could also have major ramifications for the state, which Goldman Sachs analysts estimate accounts for 25 per cent of planned data centre capacity.
