Why the US midterms sparked an AI stock selloff

The sell-off in the US on Thursday was most dramatic on the Nasdaq, home to tech industry titans such as Alphabet, Nvidia, Meta and Apple. It followed sweeping gains by the Democrats in this week's midterm elections in the US, which have given the party full control of Congress. A number of leading Democrats campaigned against the unhindered expansion of data centres, which have underpinned the growth of artificial intelligence. Fears this will lead to more regulation of AI appear to have concerned investors.

But worries about the industry's prospects have been growing for some time. The release of Chat GPT by Open AI in late 2022 is widely seen as having generated massive public and corporate interest in the practical uses of AI. It also sparked a modern-day gold rush. Investors flocked to put their money into companies producing computer chips and networking infrastructure, building data centres and providing the energy to power them, as well as developing the AI itself.

The value of tech companies soared. The boom continued into this year.