Tech stocks worldwide are tumbling after the Democratic Party’s success in the US midterm elections, and the UK’s FTSE 100 has not been spared. The sell-off has wiped trillions of dollars off major tech stocks, with the Nasdaq dropping 5.5% on Thursday.
The decline spread to Asian markets overnight and European markets opened lower on Friday. The FTSE 100 is down 2% today, despite having fewer tech and AI companies compared to the Nasdaq, Japan, and South Korea.
Democratic gains spark tech stock sell-off
Many Democratic candidates oppose the data centers that support AI, raising concerns about a potential slowdown in AI development due to stricter regulations. The party’s control of the Senate and House of Representatives has heightened these fears.
Jason Hollands, managing director of Bestinvest by Evelyn Partners, described the market slide as “brutal”. He noted that while London’s stock market has fewer technology and AI-related companies, it is unlikely to remain unaffected if institutional investors adopt a risk-off sentiment.
Local resistance and political shift impact AI development
The sell-off is largely a reaction to the Democrats’ gains and the potential implications for data center development in the US. While President Trump can veto federal AI regulation, the greater risk lies at the state level, where opposition to data center projects is growing.
Local groups are concerned about electricity bills, water, land use, and community benefits. This resistance is translating into proposed moratoria, permitting rules, and other requirements that could slow projects or increase costs.
According to Data Center Watch, 45 projects across 27 states were blocked or delayed in the second quarter, representing $68 billion in potential investment. While this spending may not be permanently lost, the broader signal is that local opposition could create friction for a much larger pipeline of developments.
AI bubble debate and investor anxiety
The US AI buildout is not expected to stop, but local resistance and the political shift could impact development pace, permit issuance, and the economics of building new capacity. This is contributing to investor anxiety.
Growing Concerns Over AI Investment and Productivity
Recent weeks have seen increasing unease about the substantial capital expenditures being invested in AI infrastructure. This concern is fueled by rising bond yields and a lack of clear evidence that AI will deliver the expected productivity gains.
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