“The blood is in the streets, folks,” said Neil Wilson at Saxo Markets.
“The fear is a total momentum unwind as Democrats pace the frontier and kibosh data centre buildout… this looks totally overdone but the nature of sell-everything of this market means we need to look for some stability first.”
Data centres have faced broad opposition from US voters across the political spectrum, and many midterm winners have pledged to put the brakes on such projects.
Analysts said investors were also spooked by a call from progressive US Senator Bernie Sanders for a national moratorium on their building.
Michael Hewson at MCH Market Insights said investors were selling up because of “concerns that we might see greater opposition to AI buildout plans, with the results in Texas prompting concerns that politicians in the state might target Elon Musk’s Tesla and SpaceX due to his support for Trump”.
The results compounded already heightened fears about the hundreds of billions firms had pumped into the sector and when they would see a return, while the recent spike in borrowing costs also fuelled concerns about their financial position.
The eye-watering rally in many companies’ valuations had also caused unease on trading floors.
New York’s Nasdaq plunged 5.5 per cent in its worst day – percentage-wise – since April last year when Trump unveiled his wide-ranging global tariffs. The S&P 500 tanked more than 4 per cent and the Dow more than 3 per cent.
Bloomberg said the Philadelphia Semiconductor Index had collapsed around 16 per cent this week, putting it on course for its worst run since April last year.
Trump blamed the collapse on the Democrats, writing on Truth Social: “The Stock Market crashed today because the Dumocrats had a big Tuesday – So sad to see, you only have yourselves to blame! President DONALD J. TRUMP.”
