US midterms could burst the AI bubble as investors fear regulation

US stock markets fell sharply Thursday, led by the Nasdaq, after Democratic gains in the US midterm elections raised investor fears of increased artificial intelligence regulation. The sell-off reflects growing concerns about the AI industry's prospects. Democrats, who won full control of Congress, campaigned against the expansion of data centres, citing high water and electricity consumption and local disruption. A Gallup poll showed 71% of Americans oppose data centres in their communities, and new legislation could curb industry growth. Investor worries about AI overvaluation had been building for months, despite investments expected to reach $1 trillion in 2026. Analysts suggest traders will become more selective, favoring firms with stronger balance sheets, as the political shift may restrict data centre construction and AI deployment.