Why the US midterms sparked an AI stock selloff

Here is a story making headlines in the economy: Why the US midterms sparked an AI stock selloffImage source, Getty ImagesByTheo Leggett, International business correspondent and Osmond Chia, Business reporterPublished6 November 2026Is the artificial intelligence (AI) gold rush coming to an end, or is this simply a reality check? That's the question which is hanging over investors, and which has prompted steep falls on the world's stock markets. 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.

Economic Details

But worries about the industry's prospects have been growing for some time. AI boom 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.

Investments in AI are expected to reach $1trillion in 2026 alone according to research by Goldman Sachs. The sector has scooped up so much available cash that other industries have seen their own borrowing costs increase as a result. But investors want returns, and in recent months concerns have been growing about whether the AI boom can produce the expected riches.

Analyst Views

Those worries have emerged at a time when public comments from AI researchers casting doubt over the safety of artificial intelligence - even suggesting it could represent an existential threat to humanity - have been grabbing headlines and fuelling speculation that a clampdown could lie ahead. US tech stocks edge back up after AI slowdown fears sent value of firms plummeting How does it affect me if share prices fall? Published1 day agoThese firms you've never heard of are feeding fears the AI bubble could burst Published6 days agoDemocrat oppositionWhile the Trump administration has been all-in on AI, or "super intelligence" as the president likes to call it, many leading Democrats tapped into grassroots concerns about the expansion of data centres and their impact on local communities.

These were largely focused on the facilities' high consumption of water and electricity, which many feared would push up their household bills – as well as the noise, use of land, and general disruption associated with them. A Gallup poll published in May showed 71% of Americans would oppose the building of a data centre in their community.

Economists are analysing what the news means for the markets.