Major tech stocks experienced a historic sell-off following Tuesday's US midterm elections, wiping hundreds of billions of dollars in market value amid growing concerns over an artificial intelligence slowdown. The dramatic market rout on Thursday sent the tech-heavy Nasdaq composite index down by more than 5.5%, shedding an estimated $2.5 trillion in market capitalisation.
Market Rout and Semiconductor Losses
The sweeping stock market drop hit artificial intelligence and semiconductor firms particularly hard. Shares in major chipmakers plummeted, with Nvidia sliding more than 9% to lose over $400 billion in market value. Other prominent semiconductor manufacturers also suffered steep declines, as AMD and Micron both dropped by more than 17%, Intel fell 10.3%, and SanDisk plunged over 22%.
The Philadelphia Semiconductor Index dropped by more than 12%. Furthermore, the "magnificent seven" tech companies—including Apple, Nvidia, and Tesla—shed a trillion dollars in value in a single trading day. Elon Musk's companies also took a heavy hit, with Tesla shares falling nearly 11% and SpaceX dropping 8%, stripping over $300 billion from their combined market value on Thursday.
Impact on Broad US Stock Indexes
The shockwaves quickly spread across Wall Street, dragging down other key US stock indexes in their worst session since 2025. The S&P 500 index fell by 4.4% by the closing bell, while the Dow Jones Industrial Average dropped more than 3.4%. The Nasdaq Composite's sharp decline pushed the index into correction territory, defined as falling at least 10% below its recent high.
Susannah Streeter, chief investment strategist at Wealth Club, noted that investor anxieties are compounding. "Fresh panic over the AI trade has hit Wall Street hard," she said, adding that worries about whether massive AI infrastructure investments will pay off are colliding with expected construction slowdowns.
Political Shifts and Data Center Restrictions
The market slide followed Tuesday's midterm elections, which saw Democrats win both the US Senate and the House of Representatives, taking control of Congress for the remainder of President Donald Trump's term. Democratic campaigns across the country focused heavily on slowing the expansion of data centres and restricting the hubs vital for powering artificial intelligence technology.
In Texas, Democratic governor-elect Gina Hinojosa campaigned on placing a moratorium on new data center construction. Meanwhile, tech leaders admitted they were caught off guard by the public backlash. Speaking at the WSJ Tech conference in Napa, California, OpenAI president and co-founder Greg Brockman stated that the industry needs to actively engage with local communities rather than assuming infrastructure projects will face no resistance.
Key Facts of the Tech Stock Slump:
- The Nasdaq composite index dropped over 5.5%, wiping out an estimated $2.5 trillion in market value.
- Nvidia shares slid more than 9%, reducing its market value by over $400 billion.
- AMD and Micron shares both plummeted by more than 17%.
- The S&P 500 index decreased by 4.4% by the end of trading.
- Democrats won control of both the US Senate and the House of Representatives in Tuesday's midterms.
Frequently Asked Questions
What caused the major tech stock plunge?
Major tech stocks plummeted following the US midterm elections after Democratic wins and ballot measures aimed at restricting AI development sparked fears of a slowdown in data center construction.
How much market value did the Nasdaq lose?
The Nasdaq composite stock index closed down by more than 5.5%, losing an estimated $2.5 trillion in market capitalisation and entering correction territory.
How did major semiconductor companies perform during the sell-off?
Semiconductor companies suffered severe losses, with Nvidia down over 9%, AMD and Micron dropping more than 17%, Intel falling 10.3%, and SanDisk plunging over 22%.