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Shares in Elon Musk’s SpaceX have plunged as tech and artificial intelligence stocks more broadly plummeted a day after the Democrats swept to victory in the midterms.
Those losses dragged the tech-heavy Nasdaq Composite stock index down, which had fallen by more than 5% at one point in early trading.
The market has been reacting to possible tougher scrutiny of data centre construction and the artificial intelligence (AI) industry following Democrat wins in key data centre states including Texas.
Following the election, some tech leaders have acknowledged they need to improve their communication around data centres and the benefits of AI.
SpaceX shares were down more than 7% in early trading on Thursday, while Tesla shares dropped more than 9%.
Musk had spent nearly $450m backing Republican campaigns, including at least $45m in support of Ken Paxton for the Texas senate seat, but Texas was turned blue in the Democratic tsunami on Tuesday night.
Texas governor-elect Gina Hinojosa campaigned heavily against data centres, pledging a moratorium on new construction in the sector.
Shares in chipmakers have been suffering, with AMD dropping nearly 17% over the past five days, while Micron shares have plunged more than 20%.
Intel shares are down more than 18% over the past five days, Nvidia shares have dropped more than 10%, and the Philadephia Semiconductor Index has fallen by more than 13%.
Some tech leaders have said they were caught off guard by the backlash against data centres in the midterms.
OpenAI president and co-founder Greg Brockman said he believed everyone had been surprised by the reaction to data centres, and more work needed to be done to ensure communities were on board.
“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,” Brockman said at the WSJ Tech conference in Napa, California on Wednesday evening.
Meta’s president Dina Powell McCormick agreed that the industry needed to improve their communication about the benefits of AI.
“I think we need to double and triple down on telling the story,” she told the WSJ conference.
Alongside the immediate impacts of the US mid-term elections, some investors have become concerned that AI shares could be in a bubble that is due a correction.
These firms you’ve never heard of are feeding fears the AI bubble could burst
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