What happened in the markets
Shares in Elon Musk's SpaceX dropped sharply on Thursday as technology and artificial intelligence stocks fell across Wall Street, the BBC reported. The selling came one day after Democrats swept to victory in the midterm elections.
The tech-heavy Nasdaq Composite was down by more than 5% at one point in early trading. The S&P 500 was down 3.8% by lunchtime. According to the BBC, SpaceX shares had fallen more than 9% by midday, and Tesla shares were down more than 11%.
Chipmakers took some of the heaviest losses. AMD fell more than 14%, and Micron was down as much as 17% before recovering slightly. Intel dropped more than 7%, and Nvidia fell nearly 9%. The Philadelphia Semiconductor Index had fallen by 10%.
Why data centres are in focus
The BBC said the market was reacting to the possibility of tougher scrutiny of data centre construction and the wider AI industry. Democrats won in several key data centre states, including Texas.
Texas governor-elect Gina Hinojosa campaigned heavily against data centres and pledged a moratorium on new construction in the sector, according to the BBC.
Susannah Streeter, chief investment strategist at Wealth Club, said the steep falls on the Nasdaq and S&P 500 were sending shockwaves into other markets. "Fresh panic over the AI trade has hit Wall Street hard," she said. She added that fears the vast sums poured into AI infrastructure may not deliver the expected returns were "now colliding with the prospect of a sharp slowdown in data centre construction."
Musk's political spending
The BBC reported that Musk had spent nearly $450m backing Republican campaigns. That included at least $45m in support of Ken Paxton for the Texas Senate seat. Texas turned blue in what the BBC described as a Democratic tsunami on Tuesday night.
Other outlets framed the night as a setback for Musk. Headlines from The New York Times, The Boston Globe and Bloomberg pointed to his losses at the ballot box and a deepening post-election slump in Tesla shares. NDTV's headline said he had deleted pro-Republican posts after his midterm spending.
Tech leaders respond
Some tech leaders said they were surprised by the backlash against data centres. Greg Brockman, president and co-founder of OpenAI, said at the WSJ Tech conference in Napa, California, on Wednesday evening that everyone had been surprised by the reaction and that more work was needed to bring communities 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.
Dina Powell McCormick, Meta's president, agreed the industry needed to improve how it talks about the benefits of AI. "I think we need to double and triple down on telling the story," she told the conference.
The BBC also noted that, beyond the election's immediate impact, some investors have grown concerned that AI shares could be in a bubble due a correction.
