Global stocks plunge amid AI slowdown fears after Democrats’ midterm triumph

A technology sell-off that began in the United States spread through Asia and then Europe. Investors worried that weaker expectations for AI investment could reduce future company profits and economic growth. Falling prices in one major market often damage confidence elsewhere, creating pressure to sell.

The Nasdaq had its worst day in 19 months on Thursday, falling 5.5%. Asian markets followed on Friday morning: Japan’s Nikkei 225 sank 6%, while South Korea’s Kospi fell more than 8%. The sell-off then reached Europe, where Germany’s Dax dropped 1.9%, France’s Cac 40 fell 1.5%, and Spain’s Ibex lost 1.1%.

London’s FTSE 100 was down 207 points, or 1.9%, at 10,575 in mid-morning trading. The article says most markets remained higher for 2026, despite the sharp losses. However, analysts warned that prominent AI concerns could bring more selling and continued volatility.

The Nasdaq is a US share index that tracks many companies listed on the Nasdaq stock exchange. It is especially sensitive to technology and AI news because technology companies make up a large part of the index. When investors revise their expectations for those companies, the index can move sharply.

The article gives a clear example. The Nasdaq fell 5.5% on Thursday, its worst day in 19 months. Chip stocks led the decline, with SanDisk tumbling 22% and Western Digital falling 17%. These companies are closely linked to the technology supply chain, so fears about slower datacentre growth affected them quickly.

The Nasdaq’s fall was severe, but it had not erased all earlier gains. It was still up 4.6% since January, though more than 10% below its peak. This contrast shows how a sudden sell-off can damage prices without reversing an entire year’s rise.

The falls were large because they happened across several major markets in quick succession. The Nasdaq dropped 5.5% on Thursday, its worst day in 19 months. Asia followed with a 6% fall in Japan’s Nikkei 225 and a decline of more than 8% in South Korea’s Kospi. Europe also suffered broad losses.

In London, the FTSE 100 fell 207 points, or 1.9%, to 10,575 in mid-morning trading. Germany’s Dax lost 1.9%, France’s Cac 40 fell 1.5%, and Spain’s Ibex dropped 1.1%. Individual technology shares fell even more: SanDisk declined 22% and Western Digital 17%.

These falls came after strong gains earlier in 2026. The Nasdaq was still up 4.6% since January, while the FTSE 100 had gained almost 6.9%. However, the FTSE was more than 300 points below its July record, showing how quickly market leadership can weaken.

The article links the Democrats’ midterm victory with fears that spending on AI infrastructure and datacentres could slow. The concern was not presented as a confirmed policy decision. Instead, investors worried that a political change might threaten the spending boom supporting technology companies and the wider US economy.

The mechanism is straightforward: datacentres and AI infrastructure require large continuing investments. If investors expect that build-out to slow, companies supplying chips, memory, hard drives, and other equipment may receive fewer orders. Expected profits can fall before actual spending changes, causing share prices to drop quickly.

Some analysts challenged the idea that the victory would end the AI investment cycle. Mohit Kumar of Jefferies said Democrats would not want to give up an important growth engine. He also said datacentres and AI infrastructure create jobs, giving politicians a reason to keep investment and employment in the United States.

Datacentres are purpose-built facilities containing computing equipment and supporting systems. AI infrastructure is the wider network of hardware and facilities needed to develop and operate AI, including high-performance computers, chips, storage, networking, and power systems. The source specifically connects this infrastructure with datacentre expansion.

These projects require large investments because AI systems need substantial computing capacity and supporting equipment. That creates demand for semiconductors, memory, hard drives, electronics, and other industrial inputs. The article identifies copper as a key material used in semiconductors, electronics, and automobiles, and says its price is increasingly influenced by datacentre sentiment.

The investment matters beyond technology companies. Mohit Kumar said datacentres and AI infrastructure create jobs and help drive US growth. Investors became worried that the build-out might slow, threatening the spending spree behind the boom. The article does not give a total investment figure, but it describes the spending as massive.

Share prices reflect what investors think companies may earn in the future, not only what they earn today. If AI profits appear less certain, investors may decide that technology companies and their suppliers are worth less. Many then sell at once, producing steep price falls.

The key mechanism is the investment chain. Slower datacentre expansion could mean less spending on chips, memory, hard drives, electronics, and related equipment. On Thursday, chip stocks led Wall Street’s decline: memory maker SanDisk fell 22%, while hard drive maker Western Digital dropped 17%. Copper also faced pressure because its demand is linked to semiconductor, electronics, and datacentre sentiment.

The speed of the losses reflected intense anxiety, not proof that every company’s business had already collapsed. The Vix, Wall Street’s fear index, jumped 61% to its highest level since the early weeks of the Iran war. Analysts warned that AI concerns could cause more selling, although one economist rejected the idea that the AI trade was already unwinding.

Financial markets continually estimate what companies and economies may earn in the future. When new information changes those expectations, investors adjust today’s prices. If the change is sudden or uncertain, many investors may sell together, increasing volatility and turning paper gains into immediate losses.

The article shows this process through AI fears. Investors worried that datacentre expansion and the spending supporting the technology boom could slow. Technology shares then fell sharply, including SanDisk by 22% and Western Digital by 17%. The Vix rose 61%, signalling much greater anxiety. Falling prices also triggered margin calls for clients who had borrowed or committed money against their positions.

This does not mean the market’s entire earlier rise disappeared. The Nasdaq remained 4.6% above January’s level, and the FTSE 100 was nearly 6.9% higher in 2026. But both were below recent peaks. The next direction depends on whether AI investment fears deepen or confidence returns.