The Nasdaq Composite closed sharply lower on Thursday, posting its biggest one-day drop in 19 months and confirming a correction, as chipmakers sank on fears of tougher regulation of artificial intelligence.
Democrats won control of the US Congress in Tuesday’s elections, including in states where opposition to new data centres has grown, raising concerns that tighter rules could slow the AI infrastructure build-out that has driven stocks to record highs this year.
Nvidia fell more than 9%, while the Philadelphia SE Semiconductor index plunged more than 12%. The selloff wiped about US$3 trillion off the market value of S&P 500 companies.
It was the Nasdaq’s steepest daily fall since President Donald Trump’s “Liberation Day” tariff announcement in April 2025, and left the index more than 10% below its record close on Oct 6, the threshold for a technical correction.
Other large technology stocks also lost ground, with Meta Platforms down 4% and Amazon and Alphabet each down 2.2%. Data centre companies IREN and Applied Digital fell more than 14%, while CoreWeave dropped almost 10%.
Melissa Brown, global head of investment decision research at SimCorp, said investors appeared to recognise that some newly elected members of Congress and governors wanted to slow the pace of AI infrastructure development, and that any slowdown would raise concerns because the AI growth story has depended on a rapid build-out.