Shares in Elon Musk's SpaceX fell as tech and AI stocks dropped broadly after the Democrats' midterm wins. Investors are reacting to possible tougher scrutiny of data centre construction and the AI industry.
SpaceX shares were down more than 7% in early trading on Friday, while Tesla dropped more than 9%. Tech and AI stocks fell more widely, a day after the Democrats swept to victory in the midterms.
The losses dragged the Nasdaq Composite lower. The tech-heavy index fell by more than 5% at one point in early trading.
Data centre scrutiny weighs on the market
The market is reacting to possible tougher scrutiny of data centre construction and the AI industry after Democrat wins in 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.
Musk had spent nearly $450m backing Republican campaigns, including at least $45m in support of Ken Paxton for the Texas senate seat. Texas was turned blue on Tuesday night.
Chipmakers have been suffering. AMD dropped nearly 17% over the past five days, and Micron shares plunged more than 20%. Intel shares are down more than 18% over the past five days.
Nvidia shares have dropped more than 10%, and the Philadephia Semiconductor Index has fallen by more than 13%.
Tech leaders concede a communication gap
Some tech leaders say the backlash caught them off guard. OpenAI president and co-founder Greg Brockman said he believed everyone had been surprised by the reaction to data centres, and that more work was needed to ensure communities were on board.
Meta president Dina Powell McCormick agreed the industry needs to communicate better about the benefits of AI. She told the WSJ Tech conference: "I think we need to double and triple down on telling the story"
Alongside the election fallout, some investors have become concerned that AI shares could be in a bubble that is due a correction.
Source: BBC News
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