Nvidia and SpaceX lose billions in market value as tech and AI stocks plummet

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 9% in by lunchtime in Thursday trading, while Tesla shares dropped more than 11%.

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 more than 14% on Thursday, while Micron shares had dropped by as much as 17% before recovering slightly.

Intel shares are down by more than 7% and shares in Nvidia have fallen nearly 9%, while the Philadelphia Semiconductor Index had fallen by 10%.

The stock falls also hit the S&P 500 index, which dropped by 3.8% by lunchtime.

Susannah Streeter, chief investment strategist at Wealth Club, said the steep sell-off on the Nasdaq and the S&P 500 was sending shockwaves into other markets.

"Fresh panic over the AI trade has hit Wall Street hard," she said.

"Fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on are now colliding with the prospect of a sharp slowdown in data centre construction."

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.