Business · Markets · 2 hrs ago
US stocks fall sharply as investors reassess AI spending risks
US stocks plunged on Thursday, reversing a rally the previous day after the midterm elections.
The S&P 500 fell nearly 4.4%, while the Nasdaq Composite dropped 5.5%, its worst one-day decline since April 2025.
The Nasdaq is now 11.9% below its October 6 high, putting it in correction territory, generally defined as a fall of at least 10%.
Technology and AI-linked companies led the losses, including Nvidia, Meta and SpaceX.
Investors are weighing whether a Democratic-controlled Congress could slow the construction of data centres because of concerns about their electricity and water use.
A Democrat’s victory in Texas added to concerns, because her campaign included a pause on approvals for new data centres in a state important to the industry.
The sell-off also reflects worries about high technology valuations and dependence on AI growth, and investors may turn to bonds and cash as safer options.
U.S. stocks fell sharply on Thursday, reversing the previous day’s post-election rally as investors reassessed the risks to artificial-intelligence spending.
Technology shares led the decline, with the S&P 500 down about 4.3% to 4.4% and the Nasdaq down between 5.5% and 6.3%, according to different reports.
Investors were concerned that a Democratic-controlled Congress and state governments could slow data-centre construction through regulation or approval pauses.
The sell-off also reflected concerns about high technology-stock valuations and the market’s concentration in a small number of major companies.
Some analysts said the reaction may be a sentiment shock rather than a change in fundamentals, while warning that automated selling added to market pressure.
- Who
- U.S. stock investors and major technology companies, including Nvidia, Meta and SpaceX.
- What
- Stocks fell sharply as investors reassessed the outlook for AI infrastructure spending. The Nasdaq fell between 5.5% and 6.3% in reports.
- When
- Thursday, following Wednesday’s post-election rally.
- Where
- Wall Street and U.S. stock markets.
- Why
- Investors feared that election results could bring tighter regulation or delays for data-centre projects, alongside concerns about valuations and automated selling.
Investors pricing in a slowdown
Anna Wu
AI data-centre construction
Investors pricing in a slowdown
Investors feared a Democratic-controlled Congress and state governments could slow the AI build-out through regulation and project delays.
Anna Wu
Wu said the sell-off was largely a sentiment shock, noting that the president still has a veto and that the fundamentals had not changed.
Market outlook
Investors pricing in a slowdown
Investors rapidly priced in construction moratoriums, heavier regulation and reduced infrastructure spending.
Anna Wu
Wu said investors could begin looking for entry points in the coming weeks.
U.S. stocks rallied after the midterm election results.
Investors reassessed the outlook for AI spending and U.S. stocks fell sharply.
Automated trading added to the selling, according to Moomoo analyst Tapas Strickland.
- S&P 500
- Fell 4.3% to 4.4%, according to reports
- Nasdaq
- Fell between 5.5% and 6.3%, according to reports
- Nvidia
- Fell 9.4%, according to the Globe and Mail
- AI data centres
- At least 10% of 800 to 1,000 planned U.S. projects could be cancelled, Dan Ives estimated
- Magnificent Seven
- Lost more than $1 trillion in combined market value, CNBC reported
15 sources
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What people are saying
There are white-knuckle fears of what this blue wave will do to the AI trade
What is clear is the Democrats' election victory is the motivation
The chip rout is the 'blue trade' doing the damage. Markets are treating a Democratic Congress as a brake on the AI build-out, but [US President Donald] Trump still has his veto, so this is largely a sentiment shock rather than a change in fundamentals
And while self-feeding selling deserves respect, investors could start looking for entry points in the coming weeks.