Tech giants lose over $4 trillion as AI spending fears spark stock market crash The tech-heavy Nasdaq plummeted by over 15% as investors reacted to growing uncertainty over AI investments, with Tesla and SpaceX among the biggest losers. More than £2 trillion was wiped off the value of the Nasdaq as a tech rout fuelled fears of a stock market crash - and left Elon Musk nursing billions of pounds of losses. After making solid gains in the immediate aftermath of the midterm elections in the US, the index plunged as much as 6.4 per cent in early trading in New York on Thursday. That slashed the value of the tech giants that make up the Nasdaq 100 by £2.2 trillion and took losses since its record high on October 6 to £4.6 trillion.The Nasdaq is now in 'correction' territory - defined as a drop of at least 10 per cent - having fallen by almost 15 per cent since the peak. The sell-off was echoed on other major benchmarks with the Dow Jones Industrial Average down nearly 3 per cent and the S&P 500 off close to 4 per cent. Elon Musk has lost billions as shares in his firms SpaceX and Tesla tumble.FTSE 100 closed down 0.4 per cent or 46.55 points at 10,782.66 having risen as high as 10,948 before the tech slump in New York soured the mood. The early rise put the UK's blue-chip index within touching distance of its all-time high of 10,989 and sparked hopes that it could reach 11,000 by Christmas.FTSE 100 Hopes Dented By Tech SlumpDan Coatsworth, head of markets at AJ Bell, said: 'It's not out of the question for the FTSE 100 to top 11,000 in the coming days or weeks. A big US tech sell-off has spooked investors, however, and that has scuppered the FTSE 100's chances today.' The so-called 'tech wreck' came as concerns mounted that sweeping Democrat victories in the US elections will put the brakes on AI infrastructure development amid opposition to data centres. The political uncertainty adds to pressure on AI-related stocks as investors question whether huge spending on the pioneering technology will generate sufficient returns. Ted Parkhill, founder and chief executive of Incline Investment Management, said: 'The market's moving from the promise of AI to the price of AI.' Musk was among the biggest losers as shares in his companies SpaceX and Tesla tumbled 9 per cent and 11 per cent respectively. Nvidia shares dropped 8 per cent while SanDisk was down 17 per cent, Advanced Micro Devices tumbled nearly 15 per cent and Micron Technology plunged 14 per cent. Chris Beauchamp, chief market analyst at IG, described it as a 'bonfire of tech sentiment and market fireworks.' Wall Street's 'fear gauge' surged to its highest level in seven months. The Vix jumped by almost 70 per cent in early trading, before dropping back. The volatility index measures attitude to risk - the higher the reading, the more panicked investors are. It touched 28, up from 17 at opening but still less than half the level hit when Donald Trump unveiled his Liberation Day tariffs in April 2025.Susannah Streeter, chief investment strategist at Wealth Club, said: 'Fresh panic over the AI trade has hit Wall Street hard, with a steep sell-off sending shockwaves rippling to other markets.AI Infrastructure Spending Faces Scrutiny'Fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on are now colliding with the prospect of a sharp slowdown in data centre construction. 'The contagion is spreading. The FTSE 100, which had been on the front foot and is far less exposed to big tech, erased its earlier gains and turned negative.Even a tech-lite index with defensive appeal hasn't been able to shrug off this big case of the jitters.' The broader tech sector has entered correction territory, driven by the realization that the era of infinite spending on artificial intelligence infrastructure may be ending. Tesla and SpaceX have lost nearly $500 billion in combined market capitalization following a brutal post-midterm election selloff that has left their valuations significantly diminished. This historic decline came after both companies, led by Elon Musk, spent hundreds of millions on the 2026 midterm elections without securing favorable regulatory outcomes.The political gamble failed spectacularly, with the firms seeing their biggest bets not pay off as the market reacted to broader economic shifts and heightened political risks. Investors swiftly punished the tech giants, marking one of the steepest corrections for major technology holdings in recent history. Tesla shares dropped more than 14 percent over a two-day period, effectively wiping out approximately $220 billion from the company's total valuation.Musk Firms Suffer Heavy LossesThis precipitous fall occurred even before the broader market downturn intensified, indicating early and specific selling pressure targeting the electric vehicle manufacturer. SpaceX faced a similarly severe contraction, slipping approximately 12.5 percent in the last 48 hours. This decline resulted in about $240 billion being removed from the company's overall valuation, with SpaceX stock falling more than 10 percent below its initial public offering price earlier this year.AI companies suffered double-digit losses, with Nvidia down almost 10 percent and CoreWeave nearing its IPO price, highlighting the severity of the tech sector correction. Adding to the negative sentiment is news that members of the Democratic caucus are preparing to launch probes into corporate America. These legislative efforts will specifically target Big Tech and AI firms, aiming to push CEOs out of their positions or secure restitution for consumers.The political pressure is compounded by the fact that both Tesla and SpaceX poured hundreds of millions into the 2026 midterms. Yet their investments have not yielded favorable regulatory or economic outcomes, continuing to weigh heavily on investor confidence. While the Dow had its best post-midterm election day in 44 years, the tech-heavy indexes were battered by previous tariff concerns and geopolitical tensions.The current downturn suggests that the market is finally reckoning with the sustainability of previous spending strategies in the AI sector.