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The S&P 500 has tumbled 3% as AI chip stocks drag Wall Street toward its worst day since President Donald Trump‘s tariff announcements in 2025.
The Dow Jones Industrial Average was down 502 points, or 0.9%, as of 10:10 a.m. Eastern time, and the Nasdaq composite was 3.6% lower.
Shares tied to artificial intelligence and data centers fell Thursday as the Democrats’ sweeping US midterm victory raised concerns about potential hurdles to the sector’s rapid expansion.
Neocloud stocks, which serve as a key indicator of investor anxiety over heavy AI spending, dropped sharply, with CoreWeave falling 11% and Nebius slumping 15%. Semiconductor makers also slid, dragging the Philadelphia SE Semiconductor index down 8% to its lowest point in more than six months following heavy losses in Nvidia and Broadcom.
The broad decline put the tech-focused Nasdaq on course to confirm a technical correction, representing a 10% drop from its recent peak. Investors fear that Democratic control of Congress could bring heightened scrutiny to the data-center industry, potentially slowing infrastructure development at a time when public opposition to new facilities is mounting.
Analysts at UBS estimated that roughly 30% of expected US data center capacity additions for 2028 could be endangered by potential construction pauses, underscoring the risk to an industry reliant on rapid buildouts. The political uncertainty adds further pressure to the AI trade, as investors increasingly question whether massive infrastructure spending will generate adequate returns.
“The market’s moving from the promise of AI to the price of AI,” said Ted Parkhill, founder and CEO of Incline Investment Management.
“There’s no question that AI is going to be transformative for the world in the long run. But that doesn’t mean every AI-related stock is currently priced appropriately. There’s going to be a lot of turmoil.”
Data-center operators Applied Digital, Cipher Digital, and IREN all tumbled more than 15%. The sell-off extended to utility providers and equipment suppliers involved in the buildout, with GE Vernova dropping 7% and Constellation Energy slipping 4.3%.
Big Tech hyperscalers also fell, as Amazon dropped 3.3% and Alphabet lost 1.5%. Separately, Qualcomm plunged 9% after quarterly smartphone-chip sales missed Wall Street estimates.
