Japanese and US stock markets have been thrown into turmoil, with the Nikkei average falling below 60,000. The trigger was a selloff in New York on November 5, where the Dow Jones Industrial Average gave back all of the roughly 1,500 points it had gained the day before.
The Dow closed more than 1,800 points lower, and AI and semiconductor shares led the decline. Nvidia, the chipmaker at the center of the AI trade, fell 9.26% from its previous close.
Investors had pushed the market higher on expectations of growing investment in data centers, which AI depends on. Democrats, seen as more willing to regulate the industry, won big in the US midterms, and selling spread across a wider range of stocks on November 5 after semiconductor shares weakened the day before.
Data centers become an election issue
Data-center construction became one of the campaign's issues, with local residents opposing projects over their heavy use of electricity and water. In the Texas governor's race, in one of the country's leading data-center construction states and a Republican stronghold, a Democratic candidate who campaigned on tighter regulation defeated the incumbent.
The result is expected to work against further investment expansion. Experts describe the combination of forces hitting the market as a "triple punch."
Attention now turns to US corporate listings, as the market weighs whether the AI boom that lifted stock markets around the world is over.