Global Wipeout over fears on brakes in AI

Picture Credit: by Al Majalla

Global stock markets suffered a sharp decline after a major Wall Street sell-off wiped approximately $2.5 trillion from market valuations, as investors grew increasingly concerned about the future of artificial intelligence investments and potential restrictions on data-centre development.

The technology-heavy Nasdaq fell 5.52% on Thursday, entering correction territory after dropping more than 10% from its October 6 record high. The Dow Jones Industrial Average plunged 1,833 points, erasing its historic gains from the previous day, while the S&P 500 also recorded its steepest daily decline since April 2025.

The downturn spread across international markets on Friday, with South Korea’s Kospi falling nearly 9% at the opening bell. Trading was temporarily halted for 20 minutes following the sharp decline.

Investor concerns intensified following Democratic victories in several key US midterm races, particularly in Texas, a major destination for AI infrastructure investment. Texas Governor-elect Gina Hinojosa campaigned on introducing a temporary moratorium on new data-centre developments and removing certain tax incentives for businesses building these facilities.

The possibility of tighter restrictions has raised concerns about the future expansion of AI infrastructure, affecting semiconductor manufacturers and companies supplying computing power to data centres. Nvidia shares dropped 9.3%, while a major semiconductor index fell 12.3%. AI computing providers CoreWeave and Nebius also recorded significant losses.

Picture Credit: by HTX

The uncertainty has also exposed wider concerns about whether technology companies are investing too aggressively in data-centre capacity relative to future demand. While some investors initially welcomed the possibility of reduced infrastructure spending, market sentiment quickly shifted towards fears that restrictions could slow the broader AI industry.

However, some analysts view the correction as a potential opportunity for long-term investors, arguing that the rapid expansion of AI infrastructure had become increasingly speculative.

With major AI companies continuing to invest heavily and upcoming public listings from firms such as Anthropic and OpenAI expected to attract attention, technology markets could remain volatile as investors reassess the financial returns and long-term sustainability of the AI boom.