Indian AI-linked power stocks tumble up to 15% amid US midterm election fallout

Indian power-capex and AI-related equities slumped on Friday as a broader sell-off in US and Asian technology stocks spread to domestic markets. Shares of TD Power and Thermax each dropped 15%, while HFCL and Sterlite Technologies hit the lower circuit at a 5% decline. Other firms such as Hitachi Energy, CG Power, Aeroflex Industries and KRN Heat Exchanger also fell between 5% and 7%.

The decline was linked to expectations that the Democratic victory in the US midterm elections could lead to tighter regulation and slower expansion of data centres, potentially curbing AI infrastructure investment. US technology stocks erased roughly $2.5 trillion in market value after the election, with the Nasdaq Composite falling 5.52% to close at 24,315, its steepest single-day drop since April 2025. The S&P 500 and Dow Jones Industrial Average also recorded their worst single-day losses since that month.

Asian markets mirrored the weakness; Japan’s Nikkei fell 7% and benchmark indices in South Korea and Taiwan slipped more than 8% before stabilising later in the session. Major chipmakers Samsung and SK Hynix each lost over 10% in the morning trade, while Japan’s Kioxia dropped 14% and Taiwan Semiconductor Manufacturing Company fell up to 8.5%.

"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.

Michael O’Rourke of JonesTrading added that earnings estimates underpinning AI-related valuations were no longer credible, prompting investors to de-risk until clearer guidance emerges.

Analysts noted that the market reaction appeared exaggerated. Jun Kwang-woo, chairman of the Institute for Global Economics, said some correction was warranted but investors were overreacting to the election outcome, and that the market could stabilise soon despite regional concerns such as those in Texas.