US Stocks Plunge as Investors Fear Democratic Control Will Slow AI Data Center Buildout

Major US stock indexes fell sharply on Thursday after Democrats won control of Congress in the midterm elections, prompting investors to sell technology shares linked to artificial intelligence.

The Nasdaq Composite closed down more than 5.5 percent, entering correction territory after losing over 10 percent from its recent high. The S&P 500 dropped about 4.4 percent, and the Dow Jones Industrial Average fell more than 1,800 points, or roughly 3.4 percent. The declines erased gains from the previous session and marked the worst single-day performance for the indexes since April 2025.

Chipmakers and companies tied to data centers led the losses. Nvidia shares fell around 9 percent, Advanced Micro Devices dropped more than 17 percent, and Micron declined by a similar amount. Broader semiconductor indexes fell more than 9 percent. Traders pointed to concerns that Democratic majorities in Congress and newly elected Democratic governors in key states will impose new restrictions on data center construction and AI development.

Several ballot measures restricting data centers passed in local races on Tuesday. Investors worry that slower infrastructure spending could reduce the capital expenditures that have supported high valuations in the technology sector. AI-related investment has accounted for a large share of recent economic growth and market gains.

The sell-off extended to Asian markets. Japan's Nikkei 225 opened lower, with memory chip makers falling more than 10 percent. South Korea's Kospi index dropped more than 8 percent, triggering a trading halt. European markets also opened weaker on Friday.

Analysts at several firms noted that Democratic campaigns had emphasized limits on AI expansion. The combination of federal and state-level power shifts raised the probability of regulatory action or permitting delays for large computing facilities. Some economists suggested the market reaction reflected both the political change and existing questions about the pace of AI spending returns.

Wednesday's post-election rally had lifted indexes on the assumption that divided government might limit policy extremes. Thursday's reversal showed that investors viewed the scale of Democratic gains, particularly in states with active data center projects, as a direct risk to the AI buildout.

Utility and equipment stocks linked to power demand for data centers also declined. The magnitude of the drop left some market participants questioning whether the AI-driven bull market had entered a more sustained correction.

Corporate earnings from semiconductor companies released earlier in the week had been mixed, adding to caution. Qualcomm reported smartphone chip sales that missed some estimates, contributing to its decline. Broader concerns about capital expenditure sustainability appeared across the sector.

The market value lost from major technology companies exceeded $2 trillion in a single session by some estimates. The Philadelphia Semiconductor Index recorded one of its steepest declines in years. Traders described the selling as broad and largely indiscriminate within the AI-related group.

Looking ahead, attention will turn to how the new Democratic majority approaches legislation on technology regulation and energy infrastructure. Any delay in data center permitting could affect timelines for companies that have committed large sums to computing capacity. The reaction on Thursday indicated that investors are already pricing in a slower pace of expansion.