Shares in Elon Musk’s SpaceX plunged alongside a broader drop in technology and artificial intelligence stocks a day after the Democrats secured sweeping victories in the midterms. The market downturn drove the tech-heavy Nasdaq Composite stock index down by more than 5% during early trading.
Tech and AI Stocks Hit Hard
Markets reacted to potential stricter oversight regarding data center construction and the artificial intelligence sector after Democrat wins in critical data center states such as Texas. SpaceX shares dropped over 7% during early trading on Friday, while Tesla shares fell more than 9%.
Chipmakers also suffered significant losses, with AMD dropping nearly 17% over a five-day period and Micron shares plunging more than 20%. Intel shares declined by more than 18% over five days, Nvidia shares fell over 10%, and the Philadelphia Semiconductor Index dropped by more than 13%.
Elon Musk had invested nearly $450m supporting Republican campaigns, which included at least $45m backing Ken Paxton for the Texas senate seat. However, Texas turned blue during the Democratic surge on Tuesday night, and Texas governor-elect Gina Hinojosa campaigned vigorously against data centers by pledging a construction moratorium on new facilities.
Industry Response and Market Bubble Concerns
Several technology leaders admitted they were caught off guard by the voter backlash against data centers during the midterm elections. OpenAI president and co-founder Greg Brockman stated that everyone was surprised by the public reaction, adding that additional efforts are required to secure community support.
Speaking at the WSJ Tech conference in Napa, California on Wednesday evening, Brockman explained, “A lot of our shift over the course of this year has really been to realise that from San Francisco trying to build infrastructure in Texas, Georgia, and other places, you can’t just tweet and say: ‘This is going to be good.’ You need to be in those communities.”
Meta president Dina Powell McCormick concurred that the industry must enhance its communication regarding the advantages of AI. She told the WSJ conference that the sector needs to double and triple down on telling the story.
Beyond the immediate fallout from the US mid-term elections, some investors have grown worried that artificial intelligence shares might be trapped in a bubble that is overdue for a market correction.
