Stocks crater as investors recoil from tech companies amid AI risks
The stock market tanked on Thursday amid concerns that a shift in congressional political control following the U.S. midterm elections could slow the construction of data centers that power artificial intelligence services.
Stocks sank across the board, but technology companies with a hand in the AI sector were hit especially hard. The tech-heavy Nasdaq Composite Index tumbled 1,285 points, or 5%, in early-afternoon trading, a sign investors are reacting to the growing “headline” risks around AI, according to Wall Street analyst Adam Crisafulli of Vital Knowledge.
Market watchers think the Democrats’ sweeping electoral victories this week could bolster opponents of data centers and slow the rollout of the facilities, which have spurred widespread public opposition.
The broader S&P 500 dropped 287 points, or 3.7%, while the blue-chip Dow Jones Industrial Average plunged 1,542 points, or 2.9%.
Chip and other AI-exposed stocks are taking a particular beating. Nvidia shares fell 7.5% and were the heaviest weight on the S&P 500, a day after dropping 3.2%. Advanced Micro Devices tumbled 14.6%. CoreWeave, a company that rents access to AI chips to customers over the cloud, fell 12.1%.
In other financial markets, the initial reaction to the election results faded a bit. The price of a barrel of Brent crude oil rose 2.6% to $97.11 and recovered much of its nearly 9% drop from the day before. Uncertainty still reigns about what will happen in the war with Iran and when the global energy industry can return to normal.
