Stocks plunge as Dem midterm sweep fuels AI regulatory concerns
The Nasdaq entered correction territory as a sharp selloff in AI and semiconductor stocks swept across Wall Street
Chip, AI stocks plunge as market rotation takes hold
Main Street Asset Management CIO Erin Gibbs joins ‘Making Money’ to assess the markets as chip and AI infrastructure stocks lead a sharp sell-off.
U.S. stocks plunged on Thursday as a sharp sell-off in AI stocks rattled Wall Street.
The Dow Jones Industrial Average finished down 1,833.06 points, or 3.44%, while the Nasdaq Composite had its worst day since April 2025, closing 5.52% lower.
The Nasdaq closed in correction territory, meaning it finished at least 10% below its Oct. 6 record closing high.
Technology and chip stocks were among those hardest hit as investors weighed what Democrats' sweeping midterm election victories could mean for AI regulation and data center development.
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At the closing bell, the Dow was down about 1,833 points, or 3.4%, while the Nasdaq tumbled 5.2%. (Michael Nagle/Bloomberg)
Nvidia sank about 9.26%, while the Philadelphia Semiconductor Index plunged more than 12%.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NVDA | NVIDIA CORP. | 181.60 | -18.53 | -9.26% |
The sell-off came just one day after stocks rallied following the midterm elections.
"The obvious catalyst for the sharp selloff is that markets are pricing in the midterm results, after yesterday saw markets rise across the board as the political risk premium unwound," eToro market analyst Jakub Rochlitz said.
Rochlitz said that rising electricity prices helped turn the rapid construction of power-hungry data centers into a political issue during the midterm campaign, with some Democrats calling for restrictions or pauses on new projects.
The selloff came just one day after stocks rallied following the midterm elections. (Michael Nagle/Bloomberg via Getty Images)
"The market’s interpretation is that the AI infrastructure buildout will become slower and more expensive, which is rewriting growth expectations across the whole supply chain," Rochlitz added.
The losses extended beyond chipmakers.
Meta Platforms fell 3.96%, and Amazon and Google parent Alphabet also declined. Data center operators IREN, Applied Digital and Nebius Group each fell more than 14%.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| META | META PLATFORMS INC. | 605.08 | -24.92 | -3.96% |
| AMZN | AMAZON.COM INC. | 260.21 | -5.82 | -2.19% |
| GOOGL | ALPHABET INC. | 282.57 | -6.36 | -2.20% |
Companies tied to supplying power and equipment to the AI boom were also caught in the rout, including GE Vernova and Constellation Energy.
Tesla shares plunged about 10.77%, while SpaceX dropped 9.05%.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 343.69 | -41.50 | -10.77% |
| SPCX | SPACE EXPLORATION TECHNOLOGIES CORP. | 123.62 | -12.30 | -9.05% |
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Rochlitz said concerns that Democratic lawmakers could slow data center construction are forcing investors to reassess expectations for the AI boom. (Mario Tama/Getty Images)
The broader market also suffered heavy losses, with the S&P 500 falling 4.36%.
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"This feels like the capitulation phase for the data center capex beneficiary stocks, especially the semiconductors," Jed Ellerbroek, portfolio manager at Argent Capital Management, told Reuters. "But I think the magnitude of the moves is outsized."
Many analysts said the scale of the declines, which have now extended into a second straight day, suggests sentiment is changing, which could portend further selling, likely starting with Friday's market sessions in Asia.
Japan's Nikkei and Korea's Kospi have risen strongly this year, both up more than 20%, but they declined significantly following Wednesday's Wall Street rout and might be expected to do the same on Friday.
FOX Business' Eric Revell and Reuters contributed to this report.