Global tech stocks are plunging after investors sold shares fearing the U.S. midterm results could lead to a slowdown of artificial intelligence. The sell-off started in the U.S., however it also spread to Europe and Asia. In the US, the tech-heavy Nasdaq share index sank 5.5% on Thursday. Asian markets also fell heavily on Friday, while European markets opened lower.
Investors have concerns over Democrats pushing stricter AI regulations amid increasing opposition to data centers. Additionally, they are also worried about whether the huge amounts spent on AI will pay off.
With the sell-off, the so-called magnificent seven tech companies, including Apple, Nvidia and Tesla, shed a trillion dollars in value in a single trading day. Nvidia shares fell 9%. Shares of Elon Musk’s companies Tesla and SpaceX have also fallen, 8% and nearly 11% respectively. $300 billion has been cut from the firm’s market value.
READ: Nasdaq faces $1.8 trillion selloff risk as AI stocks grapple with regulatory uncertainty after midterms (November 5, 2026)
Musk had spent about $446 million on political contributions during the 2026 election cycle, making him the largest individual political donor of the cycle. “Guess my election-interfering space lasers didn’t work this time ,” Musk wrote on X on Wednesday, Nov. 4, after the Democratic party saw sweeping wins.
However, the huge gains seen in recent times mean that even after Thursday’s fall, the Nasdaq is still higher than it was a year ago, and up about 4.6% from where it was at the start of this year.
The sell-off spread into Asia on Friday. The Nikkei share index in Japan closed down 6% as shares in memory chip makers Kioxia and Tokyo Electron saw big falls. In South Korea, the Kospi index fell more than 8% at one point, triggering a so-called circuit breaker, a mechanism that temporarily halts trading to curb panic selling. The Kospi eventually closed down 6%, with shares in chipmaker SK Hynix falling more than 10%.
European opened lower on Friday, although the falls were not as severe as the indexes contain fewer tech stocks. The UK’s FTSE 100 index fell 1.6% while Germany’s Dax index was down 1.3%.
READ: Nasdaq 100 set to drop $1 trillion amid tech selloff as SpaceX valuation slips (June 23, 2026)
Dan Coatsworth, head of markets at AJ Bell, said investors were worried about the huge amounts of money being spent on AI with “no clear idea of when, or whether, there will be payback”. He added that the midterm “election result muddied the waters as the Democrats now have more influence and could slow down the pace of data centre roll-outs and look at new ways to regulate the sector.”
“The AI story has all been about speed, and now there is a danger of it moving to a lower gear, and some of the wheels falling off.”
Democrats across the U.S. campaigned to slow the growth of data centres and AI ahead of the midterms. “Americans don’t want Big Tech oligarchs wrecking the environment, gutting jobs and threatening humanity’s future. NATIONAL DATA CENTER MORATORIUM NOW,” Democrat Senator Bernie Sanders said in a post on X on Thursday.