The $3 Trillion Thursday: AI Stocks Plunge as Nasdaq Sinks 5.5% in Its Worst Day Since April
New York — The artificial intelligence trade suffered its worst day in 18 months on Thursday as the Nasdaq Composite plunged 5.52% to 24,315, wiping more than $2 trillion from the index and dragging global markets down with it. The sell-off, triggered by the Democrats' sweep of the US midterm elections, hit the companies building AI infrastructure hardest and left the Nasdaq in correction territory, more than 10% below the record it set only a month ago.
The scale of the rout was stark. The Nasdaq's fall was its largest one-day percentage drop since the April 2025 tariff sell-off, and by midday Fortune counted more than $3 trillion of market value gone from the index. The S&P 500 fell 4.36% to 7,353.73 and the Dow Jones Industrial Average lost 1,833 points, or 3.44%, to 51,523, more than erasing Wednesday's 1,570-point gain. The Philadelphia Semiconductor Index, a basket of 30 chip companies, plunged about 12%, its second-largest one-day fall on record. Nvidia, the company most closely associated with the AI boom, fell 9.26% to $181.60, below where it ended 2025. AMD and Micron each lost more than 17%, SanDisk fell 22% and Broadcom dropped about 10%.
The trigger was not a single earnings miss or a change in interest rates. It was a reassessment of the political risk attached to the physical buildout of artificial intelligence: the data centres, chips, power supplies and cooling systems the technology depends on. Investors read the Democrats' capture of both chambers of Congress, together with Democratic wins in state races, as a signal that the AI infrastructure boom will now be built more slowly and on tougher terms, with tighter regulation and stronger local opposition. In ten states, voters approved 40 of 41 local data-centre measures on their ballots. "The lasting theme of the election is the slowdown of the data center buildout," JonesTrading's Michael O'Rourke told Reuters.
The selling also exposed a deeper unease that had been building for weeks: that Big Tech's AI spending is outrunning the cash it generates. Alphabet reported negative free cash flow of about $9.1 billion for the third quarter, its second straight negative quarter, on capital spending of $51.4 billion. Amazon reported trailing twelve-month free cash flow of negative $42.4 billion, against positive $14.8 billion a year earlier. The Nasdaq-100 had already entered a correction on Monday as investors grew wary of AI spending with little evidence of adequate returns. On Thursday, the market punished the companies that build and finance AI capacity far more harshly than the companies that own it: Meta fell about 3.4% and Alphabet 1.6%, while the chipmakers and data-centre operators lost two to four times as much.
The damage spread across Asia on Friday. Japan's Nikkei 225 fell 5.5 to 6% in early trading, its steepest one-day drop since April 2025, and South Korea's Kospi slid as much as 8.8%, triggering a circuit breaker that suspended trading for 20 minutes. But there were signs of a bounce in the United States: by Friday morning the Nasdaq was up about 1.8% in early trading, with Nvidia and AMD leading a chip recovery, and Bitcoin, which had dipped below $75,000 overnight, was trading around $75,600. The first test of whether the sell-off was a correction or the start of something deeper comes on Friday morning, when the October jobs report is due at 8:30 a.m. Eastern time.
For now, the message from Thursday is that the AI trade, which carried global markets for two years, is no longer immune to politics. A market that priced in an uninterrupted buildout of data centres and chips has been forced to reckon with a Congress and a set of state governments that may slow that buildout down. Whether the rebound holds will depend on whether investors believe the spending can be justified — and on whether the companies at the centre of the boom can start turning their vast capital outlays into cash.