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The day after the Democratic Party won the US Congress, share prices of high-tech firms on US and Asian stock exchanges plummeted by trillions of dollars. Investors fear that Democrats will tighten control over the development of artificial intelligence and slow it down.
The Nasdaq composite index fell 5.52% on Thursday. This, according to Dow Jones data, means that the high-tech stocks included in it lost a total of about $2.5 trillion in value.
Fears of a Democratic victory come on top of general investor fears that huge investments in AI may not pay off. The Nasdaq index has been declining for a month due to these concerns.
“Wall Street is in a new panic about AI stock trading,” said Suzanne Streeter, chief investment strategist at Wealth Club. “Added to fears that the return on the huge sums spent on AI infrastructure may not be what investors expected is now added to the prospect of a sharp slowdown in the pace of data center construction.”
Musk's companies are in the red by 300 billion
This panic primarily hit companies closely associated with the construction of data centers for AI - chip and semiconductor manufacturers.
Nvidia shares fell more than 9%, knocking the company down $400 billion. Other chipmakers were hit even harder, with shares of AMD and Micron down more than 17% and shares of Intel down 10.3%.
Shares of Elon Musk's SpaceX and Tesla also fell - by 8% and almost 11%, respectively - and their value collapsed by 300 billion.
Elon Musk spent nearly $450 million on the failed Republican presidential campaign, including $45 million on the campaign of Texas senatorial candidate Ken Paxton. Traditionally Republican Texas elected Democrats.
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Other American stock indices also fell on Thursday: the Dow Jones Industrial Average lost 3.4%, the S&P 500 - 4.4%.
Asia is also falling
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In Asia, indices containing high-tech companies lost even more than American ones.
South Korea's Kospi index plunged 8.5% in early trading on Friday morning, prompting the exchange to suspend trading to curb panic. Shares of chipmaker SK Hynix fell 11.5%, shares of Samsung fell almost 10%.
Japan's Nikkei 225 fell almost 6% in early trading on Friday, while its constituent shares of chip makers Kioxia and Tokyo Electron lost 12.6% and 9.5%.
During the election campaign, many Democratic candidates promised to slow down the construction of data centers and the development of AI. In their opinion, this industry is developing too quickly and uncontrollably.
For example, the elected governor of Texas, Gina Hinojosa, promised to declare a moratorium on the construction of new data centers.
Now, with majorities in both houses of Congress and positions as high as Hinojosa's, Democrats are well positioned to make good on their promises.
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