AI stocks plunge as the Nasdaq heads for a correction and Wall Street sheds $3.2 trillion

US equities sold off sharply on Thursday, with Wall Street shedding $3.2 trillion in value as the Democratic midterm landslide upended the market’s bet on artificial intelligence¹. Sharp losses in technology shares put the Nasdaq on course for a correction^6,7. Major tech stocks plunged as the election results added to fears of a slowdown in AI².

Nvidia led a $930 billion drop in the value of 12 AI stocks by 10:04 a.m. Eastern time⁹. By mid-afternoon Nvidia was down 9% and CoreWeave 12%⁴, and Nvidia had turned negative for the year³. The Nasdaq 100 lost some $2 trillion of value after the AI trade spooked investors¹¹. US stocks suffered their biggest fall since “Liberation Day,” and the Australian dollar plunged with them¹⁰.

The reversal followed a rally in the previous session; one market commentary said traders had thought they were out of the woods after the post-election gains, only for the session to turn into “a total bloodbath” on Wall Street⁸.

Why it matters to investors

The selling was concentrated in companies tied to the data-center buildout^4,17. The market was reacting to the possibility of tougher scrutiny of data-center construction and of the AI industry after the midterms². A chipmaker selloff deepened as concern festered that a slower buildout would hurt semiconductor demand¹⁷, and Nvidia, Micron and other AI stocks fell after the elections¹⁸.

Elon Musk’s companies were caught in the rout¹⁶. Tesla shares sank as much as 12% on Thursday, following a 3.3% drop on Wednesday¹², and Tesla and SpaceX together suffered a $450 billion two-day wipeout¹³. SpaceX shares plunged as technology and AI stocks fell more broadly¹⁴, with investors worried that the midterm results clouded the outlook for data centers and for a merger¹⁵. SpaceX’s default risk hit a fresh peak as the selloff, led by a rout in chipmakers, built¹⁶.

What to watch

Monetary policy added to the pressure on the day. Cleveland Fed President Beth Hammack and Richmond Fed President Thomas Barkin hinted on Thursday at further interest rate increases^5,6.

Commentators offered different explanations for the slide. One argued that whether data-center spending, the elections or memory prices sparked it, the outlook for the battered sector now hinges on Anthropic’s initial public offering¹¹. Another argued that global heavyweights will sift out the smaller data-center providers⁴.

The day’s heaviest losses were in chipmakers and data-center operators such as CoreWeave, whose shares were crushed^3,16.