Nasdaq falls as much as 5% amid fears of tighter AI regulation
The technology-heavy Nasdaq suffered a sharp sell-off on Thursday, falling as much as 5% and entering correction territory, defined as more than 10% below its recent record high. It was on course for its worst one-day performance in 18 months and its largest daily decline since Donald Trump announced “liberation day” tariffs on trading partners in April 2025. The reversal came just one day after Wall Street recorded its strongest rally in months.
Investors were increasingly concerned that the Democratic party’s success in this week’s midterm elections could lead to tougher scrutiny of artificial intelligence and restrictions on new datacentre construction. Democratic governors were expected to impose additional obstacles, while voters rejected datacentre proposals in several local ballots. Those concerns compounded existing anxiety over the scale of AI-related spending and whether the industry’s rapid expansion can continue.
Chip and storage companies were among the hardest hit. SanDisk fell 19% and Western Digital dropped 16.5%, while Nvidia declined 6.7% and Goldman Sachs lost 5.7%. The Dow Jones industrial average was down more than 1,000 points, or 2%, at 52,264 points. The VIX volatility index jumped 40% to its highest level since the early weeks of the Iran war. Analyst Dan Ives said the election results could create “major hurdles” for AI and technology legislation over the next two years. European markets also weakened, with the FTSE 100 closing down 0.4% at 10,782.66.
Continue in the app — vote & join in ➔