Nasdaq Plunges 5.5% as Midterm Election Fallout Hits AI Stocks (6 Nov)
- Nasdaq Composite index dropped 5.5% on Thursday, its worst performance since April 2025.
- Dow Jones Industrial Average fell 1,833 points following the midterm election results.
- Semiconductor companies including SanDisk and AMD saw double-digit share price declines.
- Investors are reacting to Democratic candidates pledging to restrict AI data center construction.
- Premarket trading on Friday showed signs of recovery for major tech stocks like Nvidia.
The Nasdaq Composite fell 5.5% on Thursday, marking its worst single-day performance since April 2025. The index closed at least 10% below its October 6 record high, which constitutes a market correction. It is now more than 10% below its October record.
Democratic midterm election victories on Tuesday triggered the selloff as investors reacted to potential new regulations on artificial intelligence and data center construction. Winning candidates pledged to slow or halt the construction of AI data centers, adding pressure to the market.
The Philadelphia semiconductor index fell 12.3% on Thursday. This decline represents the worst single-day performance for the index since March 2020.
Dow and S&P 500 suffer major losses
The Dow Jones Industrial Average dropped 1,833 points on Thursday. Fox Business reported the Dow fell 3.44%, while other reports placed the decline at approximately 3.4%.
The S&P 500 declined 4.36% according to 247wallst and Fox Business. NBC News reported a 4.4% drop, while ABC News reported a 4.3% decline.
Traders reduced their expectations for a Federal Reserve interest rate hike at the December 8-9 meeting. Despite this shift, the probability of a rate increase remains at approximately 60%.
Chipmakers and tech giants lead market decline
The Nasdaq 100 dropped 6.3% on Thursday, resulting in a loss of $2.3 trillion in market value. This decline marks the index's worst day in 19 months.
SanDisk Corp shares tumbled 22% according to aroundprague.cz, while ChartMill reported a 22.26% decline.
Advanced Micro Devices shares fell 17.26% per ChartMill, while aroundprague.cz reported a 17% decline. Micron Technology Inc shares dropped 17.46% according to ChartMill, while aroundprague.cz reported a 17% decline.
Western Digital fell 17% and Seagate fell 16% according to aroundprague.cz. The Guardian also reported a 17% fall for Western Digital.
NVIDIA Corp shares declined 9.26% per ChartMill and 9.2% according to aroundprague.cz. This drop was the biggest drag on the Dow.
Broadcom Inc lost 10.43% and Intel Corp lost 10.33% of their value. SK Hynix Inc-ADR shares dropped 13.40%.
Tesla and SpaceX shares each slid close to 10% due to the election results and their involvement in AI.
The Vix volatility index jumped 61%.
Earnings reports from Arm and Qualcomm spark volatility
Mixed earnings reports from Arm Holdings and Qualcomm released on Wednesday night was the immediate catalyst for the AI stock decline.
Arm Holdings shares slid 13% and Qualcomm shares fell 9.5% following their earnings reports.
Global markets react to tech sector instability
South Korea’s KOSPI index plunged more than 8% on Friday, triggering a temporary trading halt. SK Hynix shares fell 11.7% in Seoul, and Samsung Electronics fell nearly 10% in Taipei.
Analysts debate the future of the AI bubble
Ed Yardeni of Yardeni Research said the market is witnessing "an AI bubble losing some air very, very rapidly," while Jed Ellerbroek of Argent Capital Management described the selloff as a capitulation that was larger than warranted.
Susannah Streeter of Wealth Club told The Guardian that investors fear the data center build-out may slow down, which could impact the broader spending boom. Mohit Kumar of Jefferies stated he did not believe the current market activity was the "start of the unwind of the AI trade".
Memory stocks are falling due to a combination of election fallout and pricing pressure. Despite the selloff, demand for AI data-center products remains strong. SanDisk investors are facing a situation where the company reports record revenue while its stock experiences a deepening selloff.
Political figures and corporate leaders respond to market shift
Former President Trump stated on Truth Social that "The Stock Market suffered one of the Worst Days in History based on the results of the Election". Elon Musk contributed a record $474 million to the 2026 elections, with nearly half of that amount directed toward Texas.
Governor-elect Gina Hinojosa won in Texas, which is the country's largest data center market, and hundreds of candidates who campaigned on reining in AI data centers won their races. OpenAI announced new "responsible AI infrastructure" policies on Thursday, including commitments to pay for all electricity and infrastructure used by its facilities, implement water plans, and provide local job opportunities.
Premarket trading shows signs of stabilization
As of Friday morning, Fox Business reported that NASDAQ futures were up about 1.3% while Dow futures were down 0.71%. By 6:00 AM ET on Friday, NVIDIA was up 4.02% and Broadcom was up 4.12% in premarket trading.
The company reported third-quarter revenue of $46.72 billion, a 41.2% increase from the previous year, and projects revenue between $52.3 billion and $54.3 billion for the current quarter.
Wei stated, "Demand is extremely robust, okay?
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- Asia's Chip Stocks Crashed Overnight, With SK Hynix Down 11.7% And Taiwan Off More Than 8%. Now Nasdaq Futures Are Pointing Higher - 24/7 Wall St. (247wallst.com)
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