Wall Street needed two days to work out what voters said on Tuesday. On Thursday the tech-heavy Nasdaq Composite fell 5.5% — its worst session in more than a year — and wiped out more than $2 trillion in market value on NPR's count, with other outlets putting the loss between $2.3 trillion and over $3 trillion. The index closed in correction territory. Friday brought a partial recovery: the Nasdaq gained 1.1%, the S&P 500 1%, the Philadelphia semiconductor index 4.2%, with AMD up 11% and Nvidia 2.8%. The week still ended as the fourth straight decline for the Nasdaq and the S&P's worst since 2025.
The cause was not an earnings miss or a rate decision but a reading of politics. Democrats won the midterms decisively, taking Congress and races across the states. On Wednesday markets had rallied in relief that the result was clear rather than hanging for weeks. A day later the other half of the message landed: in district after district, voters had turned against data centers.
The water and power draw of those campuses has become a local flashpoint, and candidates who promised to slow the buildout were rewarded for it — most spectacularly Gina Hinojosa, who won the Texas governor's race. That matters directly to Meta and Alphabet, both of which need the buildout to keep training and serving models.
Elon Musk's companies took the hardest hits. Tesla and SpaceX fell sharply after Musk spent hundreds of millions of dollars trying, unsuccessfully, to elect more Republicans; investors now expect his firms to draw scrutiny once the new Congress is seated in January.
It is worth separating the political signal from the market's nerves, because the second one was already frayed. AI spending has carried the US economy to 3.4% growth in the July–September quarter, and the same shares sit inside ordinary retirement and pension portfolios — which is why a two-day repricing of AI risk travels well beyond Silicon Valley.
Nor is Washington the only front. Projects have already been blocked or delayed at county and state level, and the new majorities are likely to push further. The message investors sent on Thursday was less "AI is over" than "AI is now a negotiation" — with municipalities, statehouses and, from January, a Congress that intends to have a say.
The real test comes on Monday, when the market decides whether Friday's bounce was a floor or a pause. What is already settled is the scale of the political risk: a vote against data centers cost more in one afternoon than most companies in the industry earn in a year.
