The Nasdaq index was plunging into the red on Thursday after the US midterms rattled AI-related stocks including Nvidia, Oracle and SpaceX.
The tech-heavy index, which tracks 100 of the largest non-financial companies, sank more than five per cent to around 24,416 points.
Chipmakers Nvidia and Broadcom each helped lead losses down eight and nine per cent respectively.
Elon Musk’s Tesla and Space X each plummeted 10 per cent. Musk spent around $474m midterms, making him the largest single-cycle political donor in modern American history.
“The blood is in the streets, folks. The fear is a total momentum unwind as Democrats pace the frontier and kybosh data centre buildout,” Neil Wilson, UK investor strategist at Saxo Markets, said.
Stay in the know
Three daily briefings with the key market moves and top business and political stories.
SUBSCRIBE HERE“This looks totally overdone but the nature of sell-everything of this market means we need to look for some stability first.”
The Dow Jones also tumbled 2.4 per cent while the broad-based S&P fell 3.5 per cent.
Several Democrats campaigned on concerns around AI and data centres with the results sparking a rotation out of tech stocks.
“A shakeout among the most speculative parts of the theme is underway,” said MRB Partners in a Thursday note. “The US mid-term election results will add to headwinds for big tech and the data center buildout.”
Financial related stocks had originally rallied in early trading but quickly joined the broader sell-off into later trading. JP Morgan was down four per cent and Goldman Sachs 3.7 per cent.
In London, the FTSE 100 got swept up in the afternoon woes with the blue-chip index falling 0.4 per cent.
Top fallers included Polar Capital, which holds a major AI equity portfolio, and tech infrastructure builder Computacenter. Both were down seven per cent.