WHAT YOU NEED TO KNOW
  • The Dow fell 1,833.06 points, or 3.44%, while the Nasdaq dropped 5.52% and entered correction territory.
  • Investors weighed whether Democratic midterm victories could bring restrictions or pauses affecting AI infrastructure and data center development.
  • Nvidia sank about 9.26%, while the Philadelphia Semiconductor Index plunged more than 12%.
  • The S&P 500 fell 4.36% as losses spread through technology, power, equipment and data center companies.

U.S. stocks plunged Thursday as a severe selloff in artificial intelligence companies rattled Wall Street. The rout arrived as investors weighed what sweeping Democratic victories in the midterm elections could mean for AI regulation and data center development.

The Dow Jones Industrial Average finished down 1,833.06 points, or 3.44%. The Nasdaq Composite suffered its worst session since April 2025 and closed 5.52% lower.

The Nasdaq also entered correction territory, finishing at least 10% below its Oct. 6 record closing high. Technology companies and chipmakers ranked among the hardest hit corners of the market.

Investors were assessing whether Democratic lawmakers could place restrictions on AI infrastructure and the rapid construction of data centers. Those concerns quickly hammered companies tied to chips, power generation, equipment, and data center operations.

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The steep drop came only one day after stocks rallied following the midterm elections. That reversal put political risk and the future cost of AI development squarely in Wall Street’s sights.

"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 rising electricity prices had helped make the rapid construction of data centers a political issue during the midterm campaign. Some Democrats called for restrictions or pauses on new projects as the campaign unfolded.

"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.

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Nvidia sank about 9.26%, while the Philadelphia Semiconductor Index plunged more than 12%. The declines reflected the particularly heavy pressure facing semiconductor companies and other businesses linked to the AI infrastructure boom.

Meta Platforms fell 3.96%, while Amazon and Google parent Alphabet also declined. Data center operators IREN, Applied Digital and Nebius Group each dropped more than 14%.

The damage also reached businesses that provide power and equipment for expanding AI infrastructure. GE Vernova and Constellation Energy were among the companies swept into the broader rout.

Tesla shares plunged about 10.77%, while SpaceX dropped 9.05%. The broad retreat showed that the market turmoil was not confined solely to semiconductor manufacturers or data center operators.

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The S&P 500 fell 4.36%, adding another major index to Thursday’s heavy losses. The decline demonstrated the breadth of the selloff as pressure spread beyond the technology companies that initially drew the most attention.

"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 had extended into a second consecutive day, suggested that investor sentiment was changing. That shift could signal additional selling beginning with Friday’s market sessions in Asia.

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Japan’s Nikkei and Korea’s Kospi had both climbed more than 20% during the year. However, both indexes declined significantly following Wednesday’s Wall Street rout and could face similar pressure on Friday.

The market turbulence followed warnings that Democratic lawmakers could slow construction of new data centers. Investors were therefore reassessing growth expectations surrounding the AI boom and the companies positioned to benefit from infrastructure spending.

The sudden reversal also highlighted how quickly political developments became a market concern. After the initial rally following the elections, investors turned their attention toward potential limits, delays, and higher costs for AI infrastructure projects.

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