Nasdaq Enters Correction as AI Stocks Crater on Post-Midterm Regulation Fears
A day after Wall Street cheered Tuesday’s midterm results, chip and data-center stocks are getting crushed Thursday as traders price in the odds that newly empowered Democrats move to slow the AI buildout.
U.S. stocks reversed hard on Thursday, with the Nasdaq Composite sinking into correction territory — more than 10% below the record it set last month — just one day after the index’s post-midterm relief rally. Semiconductor and data-center names led the broad selloff, tied to fears that a newly Democratic-controlled Congress, and a wave of Democratic wins in state races tied directly to data-center policy, could slow the AI infrastructure buildout that has powered most of the market’s gains over the past two years.
What’s Driving the Selloff
The clearest flashpoint is Texas. Democrat Gina Hinojosa unseated Republican Gov. Greg Abbott in Tuesday’s election after campaigning on pausing new data-center approvals until the state enacts stronger protections for local communities — a notable reversal given Abbott himself had already ordered a review of data centers’ grid connections and directed the state’s environmental regulator to pause new permits before leaving office. The stakes are unusually high in Texas, which by one estimate has nearly three times the proposed data-center capacity of Virginia, the current leader, and which has handed out more than $1 billion a year in data-center tax breaks, according to Sullu Strategic Advisory founder Yagiz Sullu. At the federal level, Rep. Yassamin Ansari, a Democrat, called on November 4 for a pause on advanced AI development until adequate regulations are in place, while a Colorado legislative staff report cited by traders noted that states have already enacted “a variety of legislation and executive orders around data centers.” By roughly 10 a.m. ET Thursday, one tracking estimate put the combined market-cap hit across a dozen major AI-linked stocks at close to $930 billion. The move is a sharp reversal from Wednesday, when the Dow jumped more than 1,100 points on relief that divided government typically means policy gridlock — though even that rally saw Nvidia logging a small decline and acting as the single heaviest drag on the S&P 500, a hint that chip-stock sentiment was already fragile before Thursday’s acceleration.
Which Stocks Are Getting Hit Hardest
AMD took the sharpest hit, falling as much as 13% to 15% intraday after opening near $424 a share — a stark reversal from Tuesday’s earnings-fueled rally, when the chipmaker posted a blowout Q3 beat with Data Center revenue nearly doubling to $8.5 billion. Nvidia slid 7% to 8.6%, trading in the $183-to-$187 range, while Intel fell 7% to 8% and Broadcom dropped 6% to 8.3%. The pain extended well beyond the chip designers: memory and storage names, which benefit most directly from data-center buildouts, were hit even harder on the same demand worries, with Western Digital down roughly 15.8%, Seagate down about 14.8%, and Micron down close to 14.6%.
Why It Matters
Thursday’s reversal is a reminder of how quickly the AI trade’s two biggest swing factors — Washington and state-level policy risk, and years of stretched valuations — can turn a relief rally into a correction within 24 hours; see FactSheets’ coverage of Wednesday’s post-midterm rally and AMD’s blockbuster Q3 earnings recap. The scale of today’s move underscores just how concentrated market gains have become around a handful of AI infrastructure names tracked on Nvidia’s stock fact sheet and Broadcom’s stock fact sheet, and across FactSheets’ broader Nvidia coverage and Market coverage sections. For the full slate of names FactSheets tracks, see the Stock Fact Sheets hub.
This article is for informational purposes only and does not constitute investment advice. Index levels and individual stock price moves cited above reflect intraday trading on November 5, 2026 and are subject to change by market close; always do your own research or consult a licensed financial advisor before making investment decisions.
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