US stocks shed roughly $2 trillion in market value within an hour of Thursday’s open. Chipmakers led the sell-off on fears that Democrats will slow America’s AI data center boom.
The S&P 500 fell 1.8% in the first 30 minutes, wiping out Wednesday’s post-midterm gain, its best day in three months. Its losses later topped 3%, the worst intraday drop since April 2025.
The tech-heavy Nasdaq slid into correction territory, meaning 10% or more below its recent peak, while the Dow fell 1,000 points.
Why Is the US Stock Market Crashing Today?
Three pressures hit chip and AI stocks at the same time.
1. Democrats Threaten America’s AI Data Center Boom
Democrats won both chambers of Congress on Tuesday and flipped governor’s races in Texas, Georgia, and Ohio.
All three governors-elect ran against fast data center growth. In Texas, Gina Hinojosa, who beat Gov. Greg Abbott, pledged a moratorium on new construction and an end to subsidies for big developers.
Georgia’s Keisha Lance Bottoms promised a temporary statewide pause to study the effect on electricity bills. Ohio’s Amy Acton wants new projects blocked unless developers pay all their own utility costs.
Texas alone is projected to hold nearly 30% of US data center capacity by 2028, according to a Bloom Energy report cited by Fortune. Data centers are the main buyers of the AI chips made by Nvidia, AMD, and Broadcom.
“Tech needs to adjust and focus on a slower pace of this AI rollout,” Fortune reported, citing tech analyst at YorkVille Ives Dan Ives.
2. Qualcomm’s Phone Chip Sales Fell 26%
Qualcomm reported late Wednesday that handset chip revenue dropped 26% to $5.14 billion, missing analyst estimates.
Rising memory chip costs have pushed up phone prices. Global smartphone shipments fell 20% in the September quarter to a 14-year low, according to Counterpoint Research.
Qualcomm shares fell almost 12% on Thursday, dragging other chipmakers with them.
“…margin outlook is lousy,” said Stacy Rasgon, analyst at Bernstein.
3. AI Spending Doubts Were Already Building
Tech stocks entered the week weak. The Nasdaq-100 lost roughly $2 trillion in October as investors questioned the cost of AI, BeInCrypto reported.
On Wednesday, Oracle and Marvell fell on plans to fund their AI build-outs, as Jim Cramer said he was waiting for capitulation before buying tech.
The data center pledges landed on a market already worried about whether AI spending will pay off.
Which Stocks Are Falling the Most?
Chip stocks took the heaviest losses in early trading, TradingView data showed. AMD fell nearly 15%, and Qualcomm dropped almost 12%.
Micron lost about 15%, Tesla about 10%, and Broadcom nearly 5%. Nvidia, the largest US chipmaker, traded between 7% and 8% lower.
Cybersecurity names were hit too. CrowdStrike and Palo Alto Networks each fell around 9%.
The damage spread overseas. South Korea’s Kospi, home to memory giants Samsung and SK Hynix, fell 5.3%, the AP reported.
“To state the obvious, it’s AI’s fault,” said Matthew Sigel, head of digital assets research at VanEck.
BeInCrypto flagged this risk early. On November 1, it reported that Jim Cramer named the midterms as one of 3 catalysts that could extend the Nasdaq sell-off.
Did the Treasury’s $114 Billion Cash Injection Help?
It did not stop the slide. The US Treasury cut its cash account at the Federal Reserve by about $114 billion between October 27 and November 3, Daily Treasury data show.
That spending lands in bank reserves. Most of it was routine, including about $87 billion in Medicare payments on October 30 alone.
The cash may also flow back. Treasury expects its balance to fall to $850 billion by year-end, then rise to $1 trillion by March.
Is the AI Trade Over?
Not everyone thinks so. Fundstrat’s Tom Lee called the drop in data center and AI stocks a short-term reaction, Stocktwits reported. He expects states to keep courting investment, on stricter terms.
Qualcomm also offered a counterpoint. CEO Cristiano Amon said Android handset sales had bottomed out, and the company guided data center sales to $650 million next quarter, above estimates.
Crypto is tied to the same trade. On October 30, BeInCrypto reported Deutsche Bank’s warning that an AI sell-off could sink US stocks and the dollar together, with risks for Bitcoin (BTC) and gold.
The next test comes Friday. Jim Cramer has called the October jobs report the midterm rally’s real test, and Thursday’s losses have already erased that rally.
