WASHINGTON — Democrats’ sweeping midterm election victory unleashed a rout of tech stocks on Thursday, with investors worried the party will use its gains in state capitols and the US Congress to impose new regulations that will slow the AI infrastructure buildout that has fueled this year’s market gains.
Two days after Democrats flipped seven seats in the Senate, gained at least 39 in the House of Representatives and picked up five governorships, stocks sold off across the board, with the tech-heavy Nasdaq Composite notching a 5.56% drop, its most dramatic fall in 19 months.
The election reflected broad dissatisfaction across America with President Donald Trump, particularly his launching of a war in Iran that has sent fuel costs soaring, powering Democratic wins in Republican-led states including Texas, South Carolina, Kansas and Iowa.
“Investors appear to be recognizing that some newly elected members of Congress and governors are looking to slow the pace of AI infrastructure development,” said Melissa Brown, global head of investment decision research at SimCorp. “While it seems unlikely that they will be able to stop it altogether, any slowdown would raise concerns because the AI growth story has largely depended on the rapid buildout of supporting infrastructure.”
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