KABUL (Pajhwok): Concerns among investors over the possibility of stricter regulations on the artificial intelligence (AI) industry have intensified following the Democrats’ victory in the US midterm elections, triggering a sharp decline in technology stocks in US and Asian financial markets.
Investors fear that Democrats could use their newly gained political influence in Congress and state governments to increase oversight of AI companies and data centres and slow their expansion, Reuters reported.
Amid these concerns, the technology-heavy Nasdaq Composite (.IXIC), which tracks major US technology companies, fell by 5.5 per cent on Thursday, marking its biggest single-day decline in about 19 months.
The trend spread to Asian financial markets on Friday, with Japan’s Nikkei index falling by around six per cent, while stock markets in South Korea and Taiwan also recorded significant losses.
Shares in major manufacturers of electronic chips used in AI, including South Korea’s Samsung and SK Hynix and Taiwan’s TSMC, also declined, the report said.
According to the report, investors’ concerns extend beyond the Democrats’ election victory. Questions have also been raised about the enormous costs of AI infrastructure, the profitability of such investments and public opposition to the construction of data centres.
Financial market experts have warned that stricter requirements for building data centres and AI infrastructure could affect the industry’s expansion.
Gina Hinojosa, the newly elected governor of the US state of Texas, has also said her administration would introduce new laws to protect residents from the impact of data centre operations.
Meanwhile, some economic analysts have said the latest fall in share prices may have been excessive, although concerns about the future of the AI industry and the possibility of tighter regulations remain.
Democrats won majorities in both chambers of the US Congress in the November 3 midterm elections and are expected to take control when the new Congress convenes in January.
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