U.S. stocks plunged Thursday afternoon, with the Dow Jones Industrial Average tumbling more than 1,700 points and the tech-heavy Nasdaq sliding about 5% as a sharp selloff in AI stocks rattled Wall Street.
The Dow was down about 1,730 points, or 2.25%, while the Nasdaq fell 5.2%.
The Nasdaq entered correction territory during the session, meaning it had fallen at least 10% from 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 8%, while the Philadelphia Semiconductor Index plunged more than 9%.
The selloff 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 more than 4% and Amazon and Google parent Alphabet also declined. Data center operators IREN, Applied Digital, CoreWeave and Nebius Group each fell more than 12%.
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 12%, while SpaceX dropped roughly 8%.
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The broader market also suffered heavy losses, with the S&P 500 falling about 4%.
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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.”
FOX Business’ Eric Revell and Reuters contributed to this report.
