AI rout wipes $3tn off Wall Street as Asia stocks sink

It lands as Democrats have won back Congress

On Friday morning, Asian markets sank further after Wall Street posted its steepest tech sell-off since April 2025.

Overnight, the Nasdaq closed down 5.5%, wiping roughly $3 trillion off the value of S&P 500 companies.

Within minutes of the opening bell, Japan's Nikkei slumped 7%.

Meanwhile, South Korea and Taiwan's benchmark indices each fell more than 8%, while European futures pared early losses to 0.6%.

A big worry among investors now is that Democrat-led Congress will now curb America's AI boom.

What's driving the AI rout

As per Saxo chief investment strategist Charu Chanana, the sell-off reflects growing doubt that AI spending will pay off.

"There is also clearly an element of panic in the selling, and positioning is making the adjustment much more violent," she said.

"When investors begin unwinding these positions simultaneously, the selling can become self-reinforcing, particularly if leverage and forced liquidations are involved."

Earlier this week, Democrats won control of Congress partly by campaigning against data-centre expansion.

As per the BBC, Texas governor-elect Gina Hinojosa had pledged a moratorium on new data-centre builds in the state.

Chipmakers take the heaviest losses

In Seoul, Samsung Electronics and SK Hynix led the losses, falling nearly 10% and 12% respectively.

In Tokyo, Kioxia dropped 14%, and Taiwan's TSMC fell as much as 8.5%.

What caused the stock market sell-off?

Investors fear a Democrat-controlled Congress will slow America's AI build-out, after Democrats swept this week's US midterm elections.

That fear triggered a rush to sell tech stocks.

How much money was wiped off markets?

The Nasdaq fell 5.5%, wiping roughly $3 trillion off S&P 500 companies in a single session.

Asian chipmakers lost even more the next morning, with Kioxia down 14% and SK Hynix down 12%.