A sell-off in artificial intelligence stocks spread from Wall Street to Asia on Friday, as investors questioned whether heavy spending on the technology and its supporting infrastructure would deliver the expected returns. Sharp declines in chipmakers and other AI-linked businesses followed the Democratic Party’s victory in the US midterm elections, which added political uncertainty to existing concerns about the commercial returns from AI investment.

The Nasdaq Composite lost 5.5% on Thursday, its steepest decline since April 2025, and entered correction territory. The S&P 500 fell 4.4%, while the Dow dropped 1,800 points. In Japan, the Nikkei 225 was down 7.m. Friday, taking it below 60,000 for the first time since May. The losses put both US technology shares and Japan’s benchmark under pressure as the selling moved between markets.

The immediate political concern centred on candidates elected on Tuesday who had campaigned for restrictions on AI. Their success unsettled investors already worried about the outlook for the technology and the data centres needed to support it. The election result therefore brought together two questions: how far AI development might face new constraints, and whether the large sums already being committed to it would ultimately pay off.

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Semiconductor shares suffered particularly heavy losses. The Philadelphia Semiconductor Index, which tracks 30 of the largest companies involved in semiconductor production, dropped 12.3% on Thursday. That decline was more severe than the losses in either the Nasdaq or the S&P 500, highlighting the pressure on businesses supplying the equipment behind AI development. The contrast also showed that, although the retreat reached broader US benchmarks, its intensity was especially pronounced among chip-related stocks.

Japanese companies exposed to AI, semiconductors and data centres followed those US shares lower. In Friday morning trading, Rohm fell 20%, Furukawa Electric lost over 19%, Resonac declined 15%, Kioxia dropped more than 12% and SoftBank Group fell 11%. The range of affected businesses showed that investors were marking down more than a single part of the AI trade. Suppliers and other companies associated with the infrastructure supporting the technology were also caught in the decline.

The pressure extended beyond Japan. South Korea’s SK Hynix and Samsung were among the Asian technology names hit as regional shares followed Wall Street lower. Across Asia, companies making chips and other equipment used to power AI faced selling on Friday morning. That geographic spread underscored the international reach of the sell-off: uncertainty about AI spending was weighing on related businesses across several markets, rather than remaining confined to American technology stocks.

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The Japanese benchmark’s fall below 60,000 provided another measure of the reversal, returning it to a level not seen since May. Its 7. That distinction matters when assessing the figures: the reported US declines came during Thursday’s trading, while the Japanese figures captured the market’s response during Friday morning trading.

The political backdrop had initially been received differently by investors. Overnight Tuesday, Trump said he accepted the election results and would work with Democrats, helping Wednesday’s rally. By Thursday, however, stocks were falling sharply as attention turned towards AI-related concerns following the vote. The sequence illustrated how quickly the market’s focus shifted from the prospect of political cooperation to questions about the implications of the election for a heavily scrutinised area of investment.

Trump subsequently placed responsibility for the stock-market rout on voters. His response contrasted with the cooperative message that had helped support shares after the election. For investors, however, the uncertainty described in the sell-off was more specific than a general reaction to the result: successful candidates had advocated restrictions on AI, and the sector was already facing doubts about the payoff from spending. Those concerns formed the backdrop to the losses across technology shares.

The distinction between political risk and investment returns is important. The election added a possible constraint on AI development, but questions about the payoff from substantial expenditure were already present. Trump’s cooperative political tone helped Wednesday’s rally, while concerns about investment returns remained part of the backdrop to the subsequent sell-off. Equally, concern about restrictions does not by itself establish whether the money being spent on AI and data centres will produce the returns investors expect.

The market figures reveal the breadth of the reassessment, but they do not settle that underlying debate. The Nasdaq’s decline captured selling across the technology-heavy benchmark, while the semiconductor index showed an even sharper retreat in a group closely associated with AI infrastructure. In Japan, the losses among AI, chip and data centre-related shares offered a similar picture of pressure on the businesses linked to the spending outlook.

At the centre of the uncertainty is the relationship between expenditure and future returns. The concerns driving the sell-off were not simply about whether AI development would continue, but whether the scale of investment would be justified by its eventual payoff. Data centres featured prominently because they support the technology. That left investors weighing the prospects for AI alongside those of the companies providing the equipment and infrastructure on which its development depends.

The declines in the S&P 500 and Dow also showed that the market impact was not limited to the Nasdaq or specialist semiconductor shares. At the same time, the steeper semiconductor losses and the sharp falls in Japanese AI-linked names kept the technology investment question at the centre of the retreat. The figures support that distinction without establishing how much of each benchmark’s loss was attributable to the election or to broader spending concerns.

There was little indication of an immediate recovery in the trading signals available late Thursday in the US. US stock futures were lower again, while Asian markets were broadly weaker as Friday trading developed. Those moves pointed to the possibility of further pressure in the next US session, rather than establishing its outcome. The continuing regional declines nevertheless showed that Wall Street’s losses had not remained an isolated event as investors in Asia also sold technology shares.

Attention now turns to whether the selling persists and how the competing concerns about AI development evolve. The election has introduced uncertainty over the direction of policy, while the question of returns on heavy investment remains unresolved. Wednesday’s rally and Thursday’s reversal demonstrated the market’s sensitivity to both political signals and the AI outlook. For now, the latest figures show that selling amid doubts about spending has spread across US benchmarks and Asian technology shares.