Tech stocks slump as midterm results raise datacenter doubts

The Nasdaq composite index lost five percent on Thursday, pushing it into correction territory for the first time in months. Traders define this status as a drop of more than ten percent from the recent peak. This was the steepest single-day decline for the benchmark since April 2025.

The sell-off was driven by growing anxiety over artificial intelligence spending. Investors fear that state and local regulators will scrutinize massive datacenter projects more closely. This concern spread from New York to global financial markets, causing widespread volatility.

Chipmakers faced the heaviest losses. SanDisk shares, which supply memory components, fell by nineteen percent. Western Digital, a producer of hard drives, saw its stock drop by sixteen and a half percent. Nvidia, the central player in the AI boom, lost six point seven percent. It was the largest decliner on the Dow Jones industrial average.

The Dow also suffered, falling more than one thousand points during late morning trading. That drop represented a two percent decline, leaving the index at fifty-two thousand, two hundred and sixty-four points. Goldman Sachs shares fell by five point seven percent. The previous day had seen the largest daily gain in months as investors hoped Democratic gains would check the White House.

The midterm election results this week acted as a catalyst for the downturn. Democrats won several gubernatorial races. Voters in local jurisdictions across the country also rejected proposals to build datacenters in their neighborhoods. These outcomes suggest new state leaders may impose stricter controls on technological expansion.

Neil Wilson, an investor strategist at Saxo UK, called the action in tech stocks a complete capitulation level event. He noted that the market is experiencing a total momentum unwind. Wilson suggested that while the reaction may appear overdone, the current environment requires waiting for signs of stability before making further moves.

Dan Ives, a tech analyst, warned that the election results indicate the pace of datacenter construction will slow. He stated that Democratic control, particularly over the Senate, will create major hurdles for AI and technology legislation in Washington over the next two years. There is no way to sugarcoat the fact that these legislative barriers will impact the sector.

The VIX, widely known as Wall Street's fear index, jumped forty percent. This spike brought the measure to its highest level since the early weeks of the conflict with Iran. In Europe, an early rally faded by late trading. Britain's FTSE 100 closed down forty-six points, or zero point four percent.