“When the building goes, everything goes. » (maxim popularized by Martin Nadaud, MP and former mason from Creuse, 1850) On Wall Street, Thursday's crash precisely started from the construction site of the AI data centers.
Election hangover. Wall Street welcomed the Democratic sweep on Wednesday with a 3% jump in the Dow Jones. However, the same investors sold everything on Thursday that directly or indirectly related to artificial intelligence. The Nasdaq 100 lost 6.4%, its worst session since March 2020. In total, Nasdaq listed companies saw $2.5 trillion in capitalization go up in smoke.
The S&P 500 fell 4.4% and the Dow Jones 3.4%. We also have to go back to the customs duties of “Liberation Day” in April 2025 to find worse on the broad index. Then Asia took over on Friday morning with the Nikkei below 60,000 points.
Key Points
Chips led the fall, with the semiconductor barometer losing more than 12% and Nvidia 9%.
Voters rejected data centers in dozens of municipalities. Democratic elected officials are also calling for a federal moratorium.
The Nikkei 225 fell more than 6% in Tokyo, then the Kospi triggered a circuit breaker in Seoul.
Reason #1: The ballot box voted against AI data centers
The November 3 ballot included dozens of local referendums on data centers, in at least seven states. According to Forbes' count, thirteen municipalities in Ohio have passed bans or restrictions. Six Illinois cities also said no to new projects. Four municipalities in Maine have adopted moratoriums and two cities in Kansas have banned “high impact” sites. Alhambra, California banned data centers with more than 80% of the vote. In contrast, Wilmington, Ohio, accepted four sites.
Frank Pallone is the top Democrat on the House Energy and Commerce Committee. As early as June, he called for a federal moratorium on data centers. Furthermore, Bernie Sanders and Alexandria Ocasio-Cortez tabled a text to this effect in March. Hakeem Jeffries, future speaker, has not decided. However, he speaks of “restraint” in the face of skyrocketing electricity and water bills. Finally, in Texas, new Governor Gina Hinojosa campaigned on slowing down AI.
Jakub Rochlitz, an analyst at eToro, summarizes the sellers' reasoning for Fox Business: "The market interprets that building AI infrastructure will be slower and more expensive, which rewrites the growth outlook across the entire supply chain." Hosts IREN, Applied Digital and Nebius each lost more than 14%. Energy companies GE Vernova and Constellation also followed.
Reason #2: Washington changes boss and Musk is on the front line
The second driver of the decline is the names who will chair the committees in January. Elizabeth Warren is in position to take the Senate Banking Committee. In the House, Robert Garcia promises subpoenas “from day one.” But Elon Musk's companies paid the most. Tesla fell 10.8% and SpaceX, listed since June, 9%. Nvidia finished at -9.3% and Meta at -4%. On the other hand, Amazon and Alphabet limited the damage to around -2.2%.
"There is concern about the regulation of AI, and fear that there will be many more rules coming for this technology, as well as resistance to building data centers across the country," David Busch, chief investment officer of Trajan Wealth, told NPR. The day before, the same market was rising because the political risk premium was dissipating. The Dow even had its best post-midterm session in 44 years.
Reason #3: The AI already doubted itself
The Nasdaq Composite closed in correction, more than 10% below its October 6 record. Because investors were already wondering when the hundreds of billions invested in chips and data centers would come back. The Philadelphia semiconductor index lost more than 12% on Thursday alone. Jed Ellerbroek is a manager at Argent Capital. Speaking to Reuters, he speaks of a “capitulation phase for stocks which benefited from investment spending in data centers, especially semiconductors”.
Anthropic was aiming for an IPO the week of November 16 at a valuation of $1.5 trillion. However, estimates had risen to 2,000 billion this summer. Three major investors told the Wall Street Journal that the price is expected to fall. One of them mentions “closer to 1,000 billion” and another no longer excludes a postponement. OpenAI had already pushed back its own plans to 2027.
Donald Trump recognized Thursday evening on Truth Social as “one of the worst days in the history” of the market. He attributes it to the electoral results but promises a market “bigger and stronger than ever”. Asian investors did not wait. The Nikkei 225 opened Friday down more than 6%, then fell back below 60,000 points. In Seoul, the Kospi plunged more than 8% and broke 5,000 points. It also triggered a twenty-minute circuit breaker.
Bitcoin and cryptos swept away by the Wall Street crash
