NEW YORK: The Nasdaq Composite looked set to confirm a correction on Thursday, with chipmakers tumbling, after the Democrats’ sweeping victory in midterm elections fueled fears of tighter AI regulation.
The Nasdaq and S&P 500 were set for their biggest one-day drop since the April 2025 “Liberation Day” selloff.
Nvidia dropped 6.4 percent, while the broader Philadelphia SE Semiconductor index plunged nearly 11 percent.
The shock selloff comes a day after the Democrats’ election victory including in some key data-center states drove concerns about a slowdown in the AI data center buildout, optimism about which had pushed stock markets to record highs earlier this year.
“Investors appear to be recognizing that some newly elected members of Congress and governors are looking to slow the pace of AI infrastructure development,” said Melissa Brown, global head of investment decision research at SimCorp.
“While it seems unlikely that they will be able to stop it altogether, any slowdown would raise concerns because the AI growth story has largely depended on the rapid buildout of supporting infrastructure.”
The sharp declines put the Nasdaq Composite on track to confirm a technical correction, or a 10 percent drop from its October 6 record-high close. The more narrow Nasdaq-100 had confirmed a correction on Monday.
At a drop of around 5.4 percent, the Nasdaq-100 is set to erase over USD2.2 trillion in market value, if losses hold.
Most large-cap tech stocks also lost ground after Wednesday’s rally. Meta Platforms slid 5.7 percent, while Amazon.com and Alphabet fell 4.3 percent and 3 percent, respectively.
Data center operators IREN and Applied Digital, neoclouds CoreWeave and Nebius Group and AI-exposed utilities and equipment suppliers such as GE Vernova and Constellation Energy all saw steep losses.
Elon Musk-led Tesla and SpaceX tumbled more than 10 percent each, extending losses. Musk spent nearly half a billion dollars backing Republican candidates.
Qualcomm slid 13.5 percent after the chipmaker fell short of Wall Street estimates for fourth-quarter smartphone chip sales.
At 11:00 a.m. ET, the Dow Jones Industrial Average fell 1,146.83 points, or 2.15 percent, to 52,209.29, the S&P 500 lost 246.37 points, or 3.20 percent, to 7,440.29 and the Nasdaq Composite lost 1,273.18 points, or 4.95 percent, to 24,463.34.
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