Tech stocks fall sharply amid fears of slower AI data center growth

The Nasdaq Composite Index, which is heavily weighted with technology companies, fell 1,422 points or 5.5% to close at 24,315, entering a market correction by dropping more than 10% from its recent peak in October, CBS News Bay Area reported.

The broader S&P 500 and Dow Jones Industrial Average also declined significantly, dropping 4.4% and 3.4% respectively, as investors reacted to concerns about the impact of the recent U.S. midterm elections on AI-related infrastructure projects.

Market analysts noted that the Democrats' electoral victories could strengthen opposition to data center construction, which is essential for powering artificial intelligence services, potentially slowing the rollout of these facilities.

This slowdown could affect AI companies that are investing heavily in building data centers, and may delay significant events such as the anticipated initial public offering of AI company Anthropic, which was expected to raise up to $100 billion this month.

The sharp market decline follows a strong rally the previous day, highlighting volatility linked to political developments and investor concerns about the AI sector's growth prospects under new congressional leadership.