Nasdaq Plummets 5% on Fears of New AI Regulations
Democratic victory in Congress sparks concerns over data center expansion limits and stricter oversight of the tech sector.
Major Wall Street indices saw sharp declines this Thursday. The Nasdaq fell 5.1% to reach 24,262.14 points, representing a loss of more than 1,400 points compared to the previous session.
The sell-off was driven by the Democratic Party's victory in the United States Senate and House of Representatives. Investors fear that the new political landscape will lead to stricter nationwide regulation for the artificial intelligence industry.
Technology firms and chip manufacturers were the primary targets of this risk aversion. Nvidia and Broadcom shares dropped more than 6%, while CoreWeave saw a decline of nearly 11%.
The market expects that aggressive data center expansion could face hurdles under the new legislative makeup. The semiconductor sector, represented by the iShares ETF, recorded a drop of over 9% during the afternoon.
The change in political leadership may reduce the government momentum previously seen for technological development. Analysts note that the artificial intelligence sector is likely to face greater scrutiny in the coming years.
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