Nasdaq Falls 5.5%, Dow Drops 1,833 Points as AI Stocks Sink After Midterms

U.S. stocks fell sharply Thursday as investors dumped artificial intelligence and chip shares, a day after a post-election rally. The Dow Jones Industrial Average closed down 1,833 points, and the Nasdaq Composite dropped into correction territory, according to NBC News, ABC News and Fox Business.

The selling followed Democratic wins in Tuesday's midterm elections. Many of the winners have promised to slow or halt construction of AI data centers, and investors appeared to be pricing in the risk of tighter regulation for the industry.

The key numbers from Thursday's sell-off

• 1,833 points: The Dow's drop, or about 3.4%. ABC News reported that this wiped out the entire gain from Wednesday, when the index rose 1,570 points, or 3%, its best day since April 9, 2025.
• 5.5%: The fall in the Nasdaq Composite. Fox Business said it was the index's worst day since April 2025 and that it closed at least 10% below its Oct. 6 record close, the threshold for a correction.
• 4.4%: The S&P 500's decline per NBC News, which put the lost market value at $2.8 trillion. ABC News reported 4.3%, and Fox Business reported 4.36%.
• 6.3%: The drop in the Nasdaq 100, which NBC News said erased $2.3 trillion in market value. NBC reported that both it and the S&P 500 had their worst day since April 2025, when tariffs rocked markets.
• 12.3%: The fall in the Philadelphia semiconductor index, its worst day since March 2020, according to NBC News.
• 9.2%: Nvidia's decline, the biggest drag on the Dow, according to NBC News. It was the chipmaker's largest one-day fall since April 2025.

What triggered the AI sell-off

NBC News said the immediate trigger was a pair of earnings reports from Qualcomm and Arm Holdings on Wednesday night, which investors generally viewed as mixed. Arm slid 13% and Qualcomm fell 9.5%. Memory and storage companies were hit hard, with SanDisk down 22%. Micron, Western Digital and AMD each fell 17%, and Seagate fell 16%.

The election results added to that pressure. NBC reported that markets had largely expected Democrats to win congressional majorities but not on this scale. It also pointed to the upset win of Gov.-elect Gina Hinojosa in Texas, the country's largest data center market. Texas, Ohio, Michigan and Georgia were singled out as large data center markets. NBC said hundreds of candidates who pledged to rein in AI data centers have been elected.

Jakub Rochlitz, an analyst at eToro, told Fox Business that rising electricity prices helped make data center construction a campaign issue. He said the market now reads the AI buildout as becoming slower and more expensive, which is changing growth expectations across the supply chain.

Who else was hit

Fox Business reported that data center operators IREN, Applied Digital and Nebius Group each fell more than 14%. Power and equipment suppliers such as GE Vernova and Constellation Energy were also caught up. NBC said Cisco and Caterpillar, both major suppliers to AI data centers, fell around 6%.

Among large cloud and AI spenders, Meta fell 3.96% per Fox Business. ABC News said Microsoft closed down more than 3% and Amazon more than 2%. NBC reported that Alphabet, Meta, Amazon and Microsoft fell less than the overall market. Tesla and SpaceX each slid close to 10%, with NBC linking the drop largely to the election results and both companies' work in AI.

Why it matters for investors and consumers

The AI sector has been described by NBC as the primary driver of U.S. economic growth, and the broad indexes that fell Thursday are the benchmarks many retirement and investment accounts track. NBC noted, however, that the Nasdaq Composite is still up more than 30% since Election Day 2024.

The political debate also touches household costs. Rochlitz tied the data center backlash to higher electricity prices. On Thursday, ABC News reported, OpenAI announced data center policies it called "responsible AI infrastructure," including a pledge to pay for all electricity and infrastructure its facilities use, a water plan for each location and local job opportunities.

Analysts differed on how serious the moves are. Ed Yardeni of Yardeni Research said he did not see a bursting bubble but rather "an AI bubble losing some air very, very rapidly." Jed Ellerbroek of Argent Capital Management told Reuters the moves looked like capitulation in data center-linked stocks but were larger than warranted.

What to watch next

NBC News said selling looked likely to continue in Asia, where major indexes in Japan and South Korea fell by at least 6%. Fox Business said many analysts expect further selling beginning with Friday's Asian sessions.

Democrats still hope to win Senate seats in Mississippi and Alaska, NBC reported. Traders also scaled back bets that the Federal Reserve would raise interest rates at its Dec. 8-9 meeting, though the odds are still around 60%.

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Around Prague, based on reporting by NBC News, ABC News, Fox Business