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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 tumbled 5.52%.
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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Nvidia sank about 9.26%, while the Philadelphia Semiconductor Index plunged more than 12%.
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.
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“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%.
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%.
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The broader market also suffered heavy losses, with the S&P 500 falling 4.36%.
“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.”
FOX Business’ Eric Revell and Reuters contributed to this report.
