Wall Street’s stock market has fallen sharply in a single day for the first time in 44 years since the US mid-term elections. Shares of technology and semiconductor companies have lost about $3 trillion in market capitalization due to increased selling pressure on the development of artificial intelligence (AI) technology.

As of Thursday afternoon, the Nasdaq index was down 5.2 percent. The S&P 500 index was down 3.8 percent and the Dow Jones was down 2.9 percent, or more than 1,500 points. The S&P 500 index was down 7,394.49 points at one point, which is below the level set when the market closed on Election Day.

Shares of companies playing a key role in AI technology have seen the biggest declines. The Philadelphia Semiconductor Index fell about 9.75 percent. The index fell as much as 11 percent during trading. Shares of AMD and Micron fell about 15 percent, while Nvidia’s share price also fell about 9 percent.

The Dow Jones index rose 1,569 points, or 3 percent, on Wednesday after the US midterm elections. The rally was seen as the best post-midterm election performance since 1982.

The S&P 500 index also rose 1.6 percent to 7,688.62 points. Investors were feeling positive after crude oil prices fell more than 8 percent.

With the Democratic Party’s influence in the US Parliament, the market was bullish on the expectation that President Donald Trump’s policies could be controlled and political stability would be maintained. However, the next day, the market saw a sharp decline.

Fear of disruption in AI infrastructure development

The issue of controlling the construction of data centers became an important political issue in the US elections. The development of AI technology requires a large number of data centers. Due to the high consumption of electricity and water in such centers, there is a growing opposition at the local level.

Investors have been impressed with fears that policies that halt data center construction or tighten the approval process could slow the pace of AI development.

In the U.S. election, 41 proposals to control the pace of data center construction went to voters. Most of them were passed. Opposition to data center development, especially in the state of Ohio, had a political impact.

Delays in data center construction have put pressure on companies such as Nvidia, AMD and Micron on speculation that demand for chips needed for AI could fall.

Shares of Vistra, which deals with data center construction, fell 14 percent on Wednesday, and Vertiv’s shares fell 13 percent. AI cloud service provider CoreWeave was also affected.

Data Center Construction in Texas Main Concern

The state of Texas has been the most talked about in the US regarding the construction of data centers. Democratic Party Gina Hinojosa campaigned for an immediate ban on the construction of new data centers. After defeating Republican Governor Greg Abbott, there are fears that there will be more control over data center construction.

Texas accounts for 27 percent of the total electricity capacity of planned data centers in the U.S., according to Wells Fargo.

Amy Acton of Ohio and Keisha Lance Bottoms of Georgia also campaigned in favor of banning or curbing data center development.

However, opposition to the construction of the data center is not limited to the Democratic Party. Republican Gov. Greg Abbott also halted the permitting process for new data centers until the study of the electric grid was completed in September.

Shares of AI and technology companies fell in the US market, and their impact was also seen in Asian markets.

South Korea’s Kospi fell 5.28 percent. Trading had to be halted for some time after the decline intensified during trading. Taiwan’s major stock index fell 3.2 percent and Japan’s Nikkei fell 1.79 percent.

Investor sentiment in global markets has weakened as shares of technology companies have fallen in the US market and crude oil prices have started rising again.

However, not all sectors of the market were affected. Four of the 11 sectors of the S&P 500 saw gains. The consumer durables sector rose 1.5 percent. Berkshire Hathaway also hit a new high in its share price.

At a time when the presence of large companies based on AI technology is relatively limited in India’s stock market, the weakening of AI in the US market could create opportunities for India.

The decline in the valuation of AI companies in the global market is likely to attract investors to other markets. However, due to the weak risk perception in the global market, there is a risk of foreign investment going out in the Indian market as well.

One of the main reasons for the rise in the Indian stock market in recent times is the fall in the price of crude oil. The fall in the price of oil can have a positive impact on the economy of a big importing country like India.

How political and infrastructural barriers to AI technology development will affect the global market will be important in the coming days.