Shares of Tesla and SpaceX fell sharply on Thursday. This drop followed a significant decline in tech and artificial intelligence stocks after the U.S. midterm elections. Tesla shares dropped more than 11%. SpaceX's stock tumbled as much as 11% during the trading session. For the year, Tesla shares are down about 24%.
Key Details
The decline in tech stocks was worsened by worries about increased scrutiny of data center construction and the AI sector. This concern is particularly strong in states like Texas, which saw a Democratic victory. The Nasdaq Composite index fell over 5% at one point, reflecting broader market fears. Susannah Streeter, chief investment strategist at Wealth Club, said, "Fresh panic over the AI trade has hit Wall Street hard."
Chipmakers also faced big losses. AMD shares fell over 14%, while Micron shares dropped as much as 17%. The Philadelphia Semiconductor Index decreased by 10%. The S&P 500 index was down 3.8% by lunchtime, showing widespread market impact.
Background
Musk had invested nearly $450 million in Republican campaigns. This included $45 million in support of Texas Senate candidate Ken Paxton. However, Texas turned blue in the elections. Governor-elect Gina Hinojosa campaigned against new data center construction. The election results have led some tech leaders to rethink their communication strategies about data centers and AI benefits.
The declines in Tesla and SpaceX shares are likely to affect investor sentiment in the tech sector. This is especially true for companies involved in AI and data infrastructure. The potential for stricter regulations could lead to more volatility in these stocks.
Watch for upcoming earnings reports from major tech companies. These may provide insights into how the election results will impact their operations and outlook.
Based on reporting by: moneycontrol.com, bbc.co.uk