US Stocks Plunge $3.2 Trillion as Democratic Midterm Victory Triggers AI Sell-Off
US stocks shed $3.2 trillion in chaotic trading on Thursday as Democrats swept the midterm elections, upending Wall Street’s massive artificial intelligence bets and plunging the tech-heavy Nasdaq 100 down 6.4 per cent.
Nasdaq Plummets Into Correction Territory
Thursday’s market wipeout was among the biggest for the S&P 1500 Composite index since the turn of the millennium. The broad S&P 500 fell 4.4 per cent, its worst session since April 2025. The tech-heavy Nasdaq slumped 5.52 per cent to close in correction, trading down more than 10 per cent from its October 6 record high.
The Nasdaq share index suffered its worst day in 18 months, erasing more than $2 trillion in value by the closing bell. Wall Street’s fear index, the VIX, surged roughly 70 per cent in its largest one-day jump in nearly two years, hitting a seven-month high.
When the Nasdaq sneezes… The South Korean and Japanese stock markets tumble 6% in the wake of the US selloff.#markets #stocks #japan #korea #investing #investors
Chipmakers and Neocloud Providers Lead Market Rout
Semiconductor stocks absorbed the heaviest blow. Nvidia tumbled 9.2 per cent. Qualcomm dropped 9.5 per cent after missing fourth-quarter sales estimates due to sluggish smartphone chip demand and declining Apple-related revenue. A closely watched chipmaker index plummeted 12.3 per cent for its worst day in roughly six-and-a-half years.
AI infrastructure providers and neoclouds also absorbed severe losses. CoreWeave dropped roughly 10 per cent, and Nebius plunged 15 per cent. Data center operators including IREN, Hut 8, and Applied Digital fell between 6 per cent and 11 per cent. Utilities tied to the energy-intensive buildout, such as GE Vernova and Constellation Energy, traded lower alongside AI server maker Dell, which dropped 10.5 per cent.
In a very ugly session for tech, the NASDAQ is now down a full 5%, pulling down the S&P 500 by 4% and the Dow by 3%. (CNBC chart below.)#economy #stocks #markets pic.twitter.com/LqSqU2KUqM
Political Shift Triggers Fears Over AI Spending and Regulation
The historic sell-off followed Democratic victories in the midterm elections, which upended expectations for unchecked technological expansion. Investors fear that newly elected politicians who campaigned against data centers will hit the brakes on infrastructure development. Adam Crisafulli, president of market research group Vital Knowledge, observed that investors were throwing in the towel and indiscriminately liquidating.
Democratic lawmakers have signaled intentions to rein in the boom. Michigan senator-elect Abdul El-Sayed called for a full-on pause in frontier development.
Companies tied to Elon Musk faced heavy selling as political power shifted in Texas, where Tesla and SpaceX maintain operations. Tesla shares fell 10.8 per cent, and SpaceX dropped 9.1 per cent. European and Asian markets mirrored the US decline on Friday, with South Korea’s Kospi tumbling nearly 9 per cent to trigger a temporary trading halt.
Reaction From Markets and Officials
Following the previous day’s gains, the president wrote on Truth Social: Stock Market just hit another Record High – 91 Days in just a short period of time — Less than two years.
OUCH! Blue-Nami hits the AI trade: Nasdaq 100 sinks ~5% amid fears of tighter AI regulation after Democrats sweep Congress. Chip stocks plunge 10%, putting the Sox 37% below its peak. Nvidia drops 7%. AI spending and funding fears fuel the selloff. pic.twitter.com/Xq9woCzU5g
There is now a chance that the two years of extra push from the Trump government for AI buildout will somehow be scaled back because there has been a lot about the AI trade that has been ignored by the current administration,
said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Chipmakers were among Thursday’s biggest declines, alongside observations that not every AI-related stock is currently priced appropriately.