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First Thing: Global tech stocks wobble over AI regulation fears after midterms
Global technology shares fell after Democrats’ midterm victory prompted investors to anticipate tighter rules for artificial intelligence and datacentres. The sell-off spread from Wall Street to Asian markets and London, reflecting concern that regulation could slow the infrastructure spending behind the AI boom and make returns on large investments less certain.
The Nasdaq dropped 5.5% on Thursday, its worst day in 19 months. The briefing also reports that Google, Meta and TikTok are challenging a California law restricting features that could foster social media addiction in children; elsewhere, Paraguay’s president resigned after a banking crisis froze three million accounts, and customs officials in Lima seized more than 3,000 tarantulas hidden in socks.
In short
- Tech shares fell worldwide amid fears of tighter AI rules.
- The Nasdaq dropped 5.5%, its steepest daily fall in 19 months.
- Investors are also questioning whether heavy datacentre spending will pay off.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Investors may reasonably worry that tighter AI and datacentre rules could delay projects, raise compliance costs and make returns on substantial investments less predictable. If regulation slows infrastructure expansion, technology companies and the wider economy could lose some of the productivity gains and growth the AI boom promises.
The case against
Supporters of stronger rules can argue that safeguards are needed to address risks from AI systems and energy-intensive datacentres, and that clear standards may build public trust over time. Regulation could steer investment towards safer, more sustainable uses without ending innovation, so a short-term market reaction need not capture its longer-term effects.
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