The Nasdaq Composite ended sharply lower on Thursday, notching its deepest one-day drop in 19 months and confirming it was in a correction, as chipmakers sank on fears of tougher AI regulation after Democrats won control of the US Congress.
Democratic wins on Tuesday, including in states where opposition to new data centers has mounted, fueled concerns that tighter regulation could slow the AI infrastructure buildout that has helped lift stocks to record highs this year.
Elon Musk's Tesla and SpaceX both dropped. Musk spent nearly half a billion dollars backing Republican candidates in the midterm elections.
Qualcomm fell after the chipmaker fell short of Wall Street estimates for fourth-quarter smartphone chip sales.
"This feels like the capitulation phase for the data center capex beneficiary stocks, especially the semiconductors," said Jed Ellerbroek, portfolio manager at Argent Capital Management. "But I think the magnitude of the moves is outsized."