Wall Street crash: Nasdaq sinks 3%, S&P 500 & Dow also fall as AI and Chip stocks lead market sell-off

A day after the midterm election results, US stocks crashed on Thursday, with technology and semiconductor shares experiencing larger losses. The Nasdaq was also on its way to enter correction territory after a large number of investors sold chipmakers' and artificial intelligence (AI) data centre companies' shares.

The Nasdaq Composite was at the top to make losses among major indexes. The Nasdaq fell 795.08 points, or 3.09 per cent, to 24,941.44 at 9:57 am ET. The S&P 500 also recorded a sharp fall, and the index dropped 127.74 points, or 1.66%, to 7,560.88 at 9:57 am ET. The Dow Jones Industrial Average also declined as well, falling 351.87 points, or 0.66 per cent, to 53,004.25 at the same time.

Meanwhile, Qualcomm shares also dropped rapidly 9 per cent after the chipmaker's fourth-quarter forecast for smartphone chip sales fell short of Wall Street estimates. The result is the outcome of the company's weak demand and declining revenue from its business connected to Apple.

Broader semiconductor stocks also deepened their losses, dropping 7.1 per cent in the session. Major chipmakers such as Nvidia, Advanced Micro Devices (AMD), Intel and Marvell Technology were among the biggest drag on the index. The fall in chip stocks was tied partly to growing unease over the future of the AI industry and the breakneck pace at which data centres across the US are being built.

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Political uncertainty reduced investor sentiment

The downturn came just a day after Democrats scored a decisive win in the US midterms, taking control of the Senate. That reduced political uncertainty had initially lifted investor sentiment on Wednesday, November 4, but the mood reversed sharply by Thursday. Behind the shift was investor anxiety that a Democratic-controlled Senate might usher in tighter oversight of AI data centre development.

Reuters reported that Democrats had won in several states central to the data centre boom, areas where local resistance to the industry’s expansion has been mounting. Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, suggested that the aggressive AI push championed by the Trump administration over the last two years might now lose momentum.

She further noted that the changed political landscape could bring heightened scrutiny to AI infrastructure growth, adding that several concerns tied to the AI trade had so far gone largely unaddressed under the outgoing administration.