NEW YORK: US stocks fell sharply on Thursday as investors sold technology and semiconductor shares amid concerns that election results could lead to tighter restrictions on AI data-centre construction and weigh on chip demand.
The Nasdaq Composite slid as much as 5%, putting it on course to enter correction territory, while the S&P 500 fell around 3% and the Dow Jones Industrial Average lost more than 1,000 points at its session low. The semiconductor index dropped as much as 11%, according to Reuters.
Chipmakers led the retreat. Advanced Micro Devices and Micron Technology suffered steep losses, while Nvidia and other AI-linked companies also declined. Qualcomm fell after its outlook for smartphone-chip sales came in below Wall Street expectations.
The sell-off followed a rally on Wednesday, when major indexes rose after Democrats made sweeping gains in the midterm elections. Investors then turned to the potential implications for data-centre development, particularly in states where opposition to the facilities has grown over their electricity and water use.
Democrat Gina Hinojosa defeated Republican incumbent Greg Abbott in the Texas governor’s race. Hinojosa had campaigned against the rapid expansion of data centres, and the election outcome added to investor concerns about possible delays or higher costs for new projects.
Analysts have warned that slower data-centre investment could weaken demand for AI chips, a major source of growth for the semiconductor industry. Qualcomm’s weaker handset outlook added to the pressure, while broader concerns about financing costs and the returns on AI infrastructure spending also weighed on sentiment.
The reversal highlighted the political and financial risks facing the AI infrastructure boom, which has supported technology valuations and chip demand. Investors will now watch how incoming lawmakers and state officials approach data-centre policy.
