Synopsis

Indian power capex and AI-linked stocks tumbled as a global technology sell-off spread across markets, with TD Power and Thermax plunging 15% each. Concerns that US midterm election results could slow data centre expansion and AI infrastructure spending triggered sharp losses across Asian technology stocks and domestic market-linked companies.

Shares of power capex companies such as TD Power, Thermax, Netweb Technologies, HFCL, CG Power and Hitachi Energy, among others, tumbled up to 15% on Friday as a sharp sell-off in US and Asian AI-linked stocks triggered a broad-based decline in domestic AI-related stocks. The downturn was fuelled by the Democrats' victory in the US midterm elections.

TD Power and Thermax were among the worst-hit stocks, plunging 15% each during the session. HFCL and Sterlite Technologies, which have emerged as major AI beneficiaries in 2026, were locked in the 5% lower circuit. Hitachi Energy and CG Power fell 5% and 7%, respectively, while Aeroflex Industries and KRN Heat Exchanger declined 5% in morning trade.

What’s triggering this?

The sell-off came amid fears that gains by the Democratic Party in the US midterm elections could lead to restrictions on data centre expansion and slow down the country's artificial intelligence infrastructure development.

Concerns over a possible slowdown in artificial intelligence-related investments wiped out around $2.5 trillion in US stock market value on Thursday, as a sharp sell-off in technology stocks erased Wall Street's post-election rally.

The technology-heavy Nasdaq Composite plunged 5.52% to close at 24,315, marking its steepest single-day decline since April 2025, when US President Donald Trump announced sweeping global tariffs. The sell-off pushed the index more than 10% below its record high hit last month, putting it in correction territory.

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The weakness extended to the broader market, with the S&P 500 falling 4.36% to 7,353.73 and the Dow Jones Industrial Average tumbling 1,833.06 points, or 3.44%, to settle at 51,523.06. Both indices also recorded their worst single-day performances since April 2025.

Asian peers also bleed

The sell-off across Asia's tech-heavy markets deepened on Friday, as concerns over tighter regulatory scrutiny and a potential slowdown in AI infrastructure spending triggered a sharp retreat in equities. The rout followed the steepest decline in US stocks since the tariff-induced 'Liberation Day' sell-off in April 2025.

Japan's Nikkei plunged 7% shortly after the opening bell, while benchmark indices in South Korea and Taiwan fell more than 8%. However, markets across the region appeared to stabilize later in the session as bargain hunters stepped in. Tech giants such as Samsung and SK Hynix crashed more than 10% each in the morning.

Also read: Infosys, Wipro, TCS and other IT stocks rise up to 3% as US AI rout deepens; is the bubble bursting?

Japan's Kioxia plunged 14%, while Taiwan Semiconductor Manufacturing Company (TSMC) fell as much as 8.5% in Taiwan. SoftBank Group, a major investor in AI, tumbled 11%, while the cost of insuring against a debt default by the Japanese conglomerate surged to its highest level in four years.

"The sell-off shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone," said Dong Baozhen, chairman of asset manager Lingtong Shengtai.

AI bubble bursting?

The data-centre slowdown due to the political shift is going to be real, and the earnings estimates behind the valuations that were the cornerstone of bullish arguments are no longer valid, according to Michael O’Rourke at JonesTrading.

“Investors have no idea where those estimates will reset,” he said. “As a result, they are de-risking until clarity returns, which won’t be for some time.”

Michael Burry, who made his name shorting the US housing market, said he sold 25% of his put positions in the $58 billion VanEck Semiconductor ETF amid a deepening rout in US technology stocks. “The SMH put positions even after the sale, however, have become very large positions,” he wrote.

Where this differs from a regular selloff is that we are not seeing recoveries after significant losses, such as Intel Corp. falling further this week even after plunging almost 30% Friday, according to Jakub Rochlitz at eToro. There’s also increasing cross-sector correlation and a rise in volatility, meaning that the route is spreading across the market.

Also read:Kospi crashes 9% as Wall St bloodbath spills to Asia; circuit breaker triggered

“The all-or-nothing mentality is surprising to us, because we believe the real truth is more nuanced,” said Chris Zaccarelli at Northlight Asset Management. “We do agree that sentiment has shifted and building data centers will become more difficult, but if there is a productive business case for building them, then they will get built.”

According to a Reuters report, Jun Kwang-woo, chairman of the Seoul-based financial think tank Institute for Global Economics, said some correction in the market was warranted, but investors appeared to be overreacting to the election outcome.

Jun said the market could stabilise soon, although concerns in several US states, including Texas, could affect the pace of AI infrastructure development, particularly data centre investments.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here

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