Tech stocks tumble as election rattles AI trade
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Tech stocks plunged Thursday in the most visible sign yet that investors are growing worried about a slowdown in the AI boom.
The latest: The tech-heavy Nasdaq Composite index was down 4.7% at 3 p.m., with just an hour left in trading. The broader stock market was also down sharply.
- The sell-off is shaping up to be the stock market's worst showing since the April 2025 tariff panic.
The big picture: The sell-off comes after Democrats notched historic gains in midterm elections, including taking the governorships of Texas and Ohio — areas of intense data center development.
- In Texas, Gov.-elect Gina Hinojosa promised to impose a moratorium on new buildouts until lawmakers enact stronger protections.
- In Ohio, Amy Acton called for conditional pauses requiring developers to cover their utility costs, provide community benefits and use union labor.
Between the lines: Their victories signal growing political resistance to arguably the largest investment boom in U.S. history.
Zoom in: AI-related shares led the sell-off, with companies closely tied to the data center build-out posting double-digit losses.
- Semiconductor shares plummeted, dragging the Philadelphia Semiconductor Index down about 9%. The index is now down more 30% from its June high.
- So-called neoclouds — companies that build data centers in order to lease out their computing power to larger players like hyperscalers — were particularly hard hit. CoreWeave, for example, was down 9%.
- Even the Big Tech hyperscalers — Microsoft, Alphabet and Amazon — which supported the indexes with gains on Wednesday, were caught in Thursday's market downdraft.
By the numbers: The Nasdaq's drop puts the index into correction territory. A correction is defined as a decline of at least 10% from a recent high, in this case, Oct. 6.
The broader market slumped as well, hurt also by a rise in oil prices.
- At 3 p.m., the S&P 500 index was down about 3.5%. All 11 sectors of the benchmark index were in the red.
- The market index that looms largest in the popular imagination, the Dow Jones Industrial Average, was down by more than 1,500 points, or 2.9%.
What they're saying: Retail investors, who have played an outsized role in spurring on the market's four-year-old rally, were heavy sellers of tech stocks Thursday, said Jai Malhi, senior equity strategist at Vanda Research.
- "This is on track to be the largest amount of retail selling since the late July capitulation," he said in a note.
Editor's note: This story has been updated with additional details and prices as of 3:00 pm ET.
