Global stock markets fell sharply on Friday as investors reacted to the results of the US midterm elections and growing concerns that tighter regulation of artificial intelligence (AI) and data centre construction could affect technology investment.
The sell-off began on Wall Street on Thursday, where technology shares recorded some of their steepest losses in recent months. Investors became concerned that the Democratic Party’s victory could bring stricter oversight of the technology industry, particularly companies investing heavily in AI infrastructure and data centres.
The Nasdaq Composite, which is heavily weighted towards technology companies, fell 5.5 per cent, wiping approximately $2.5 trillion off its market value. The S&P 500 declined 4.36 per cent, while the Dow Jones Industrial Average dropped 1,833 points, equivalent to 3.44 per cent. The Nasdaq also entered correction territory after falling more than 10 per cent from its October peak.
Semiconductor manufacturers were among the hardest-hit companies as investors reassessed the prospects for demand for the chips powering AI systems and data centres. Nvidia shares fell 9.3 per cent, while Advanced Micro Devices (AMD) and memory chip manufacturer Micron each lost more than 17 per cent. SanDisk recorded an even steeper decline of 22 per cent.
The losses spread across Asia on Friday, putting pressure on several of the region’s major technology markets. Japan’s Nikkei index fell approximately 6 per cent, marking its largest single-day decline since April 2025.
South Korea’s Kospi and Taiwan’s benchmark stock index initially dropped by more than 8 per cent as investors rushed to sell shares. The sharp movements prompted authorities to intervene, and trading in South Korea was temporarily suspended.
Taiwan’s market recovered some of its losses before closing 4.5 per cent lower. However, its decline for the week reached 12.2 per cent, the largest weekly fall since 1991, according to Reuters, citing data from LSEG.
The sell-off also affected some of Asia’s most important technology companies. South Korean chipmakers Samsung Electronics and SK Hynix fell approximately 6 per cent and 9.4 per cent respectively. Taiwan Semiconductor Manufacturing Company (TSMC) closed 4.7 per cent lower, while Japan’s SoftBank Group lost 11 per cent.
European stock markets followed the downward trend. London’s FTSE 100 declined approximately 1.75 per cent during morning trading, while Germany’s DAX and France’s CAC 40 also recorded losses.
In Finland, the impact had already become visible on Thursday. Helsinki’s OMXH index closed approximately 1 per cent lower, according to Helsingin Sanomat. Nokia shares fell 7.5 per cent to 6.85 euros in Helsinki, while the company’s American depositary receipts lost almost 10 per cent in New York.
The political developments behind the market reaction centre on concerns about the future of data centre construction in the United States. During the election campaigns, several Democratic candidates called for restrictions on new facilities, pointing to their high electricity consumption, environmental impact and potential effects on surrounding communities.
Texas governor-elect Gina Hinojosa, for example, pledged to introduce a moratorium on new data centre construction during her campaign. Other successful Democratic candidates also supported stronger oversight of the industry and changes to tax incentives that benefit technology companies.
For investors, the concern is that additional restrictions could increase operating costs, delay infrastructure projects and affect the financial outlook of companies that have committed substantial resources to AI development. Data centres require significant investment in computing equipment, electricity supply and supporting infrastructure, making the sector particularly sensitive to changes in regulation and public policy.
However, the political uncertainty is not the only factor weighing on technology shares. Investors have also been questioning whether the enormous sums being spent on AI infrastructure will eventually generate sufficient returns. Major technology companies have committed billions of dollars to expanding their computing capacity, but uncertainty remains over how quickly that investment will translate into sustainable profits.
The market decline has also created difficulties for hedge funds and other investment firms holding leveraged positions in technology stocks. Reuters reported that several investment firms had reduced borrowing and dismissed trading teams following weeks of losses, adding to concerns about pressure within the financial sector.
As investors moved away from equities, government bonds attracted renewed demand. US Treasury prices rose as market participants sought alternatives to shares. The US dollar, Japanese yen and Swiss franc also benefited from demand for currencies commonly regarded as safer during periods of financial uncertainty.
Despite the scale of the losses, questions remained over whether the election results would lead to a substantial reduction in US investment in artificial intelligence. Some analysts questioned whether campaign promises would translate into policies capable of significantly changing the direction of the technology industry.
US stock futures also suggested the possibility of a partial recovery in technology shares on Friday, with Nasdaq futures rising during European morning trading. However, the sharp declines across major markets highlighted how political decisions, regulatory uncertainty and concerns about the profitability of AI investment had become closely connected in investors’ assessments of the technology sector.
