The AI Selloff Is Getting Worse. Nvidia, Dell and Data Center Stocks Are Plunging Hard. Is It Time to Buy the Dip?

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Stocks tied to the artificial intelligence buildout fell broadly again in Thursday morning trading. On Wednesday, after Democrats swept the midterm elections, data-center builders and power-equipment makers fell as much as 20% or more, and Dell Technologies ( DELL -9.90% ) , optical-networking makers, and other AI hardware names dropped 7% to 10%, even as the S&P 500 rose. Nvidia ( NVDA -6.59% ) slipped about 3% and Arm Holdings ( ARM -10.52% ) about 5%. But Thursday was worse for the biggest names. Nvidia's drop nearly doubled to about 6%, and Arm's to about 10%, and this time the broader market fell too, with the S&P 500 down about 1.5% as of roughly 9:55 a.m. ET. The builders and adjacent stocks hit hardest on Wednesday kept falling, though by less, with data-center cooling stock Modine ( MOD -5.28% ) down 9% after a 21% decline on Wednesday. Many big names felt quite a bit of damage. Nvidia, the chipmaker at the center of the AI boom, fell about 6% to $188.75. Dell, one of the biggest sellers of AI servers, dropped about 9%, erasing about $20 billion in market value, and Arm lost about 10%, another roughly $20 billion. Palantir Technologies ( PLTR -8.62% ) , server and component makers Hewlett Packard Enterprise ( HPE -8.41% ) , and Celestica ( CLS -11.56% ) each fell 7% to 8%. Astera Labs ( ALAB -15.66% ) , which makes chips that connect AI hardware inside data centers, slid about 11%. Meanwhile, builders fell for a second day. Comfort Systems USA ( FIX -8.53% ) , a mechanical and electrical contractor with heavy exposure to AI projects, fell about 9%. Argan ( AGX -9.08% ) lost about 9% and MasTec ( MTZ -9.27% ) about 8%, both pace for their second drop of 7% or more this month. EMCOR ( EME -7.40% ) and Dycom ( DY -8.28% ) were down 6% to 7%. Also hard hit were optical-networking companies, which make the lasers and equipment that move data across fiber lines, including inside AI data centers. Ciena ( CIEN -12.09% ) fell about 11%, wiping out about $4.3 billion in value. Applied Optoelectronics ( AAOI -16.15% ) dropped about 13%, and Coherent ( COHR -12.49% ) and MACOM Technology ( MTSI -14.35% ) fell 9% to 11%. Several companies that got their start in Bitcoin mining now build or rent out data centers for AI customers, and they fell too. Applied Digital ( APLD -15.05% ) , which builds large data centers for AI workloads, fell about 11%. Core Scientific ( CORZ -11.60% ) and Cipher Digital lost roughly 8% to 9%. Meanwhile, Bitcoin itself was down only about 1% through about 10 a.m. ET, signaling that investors weren't selling these stocks over crypto. It wasn't until the broader market started tumbling that Bitcoin also started sliding, down nearly 6% by about 11 a.m. ET. A big part of the worry is how quickly new data centers can be built, given the blue wave that swept through the Midterm elections. With Democrats now in charge of both chambers, investors are bracing for more oversight of an industry that many governments are already trying to regulate. In Texas, for example, one of the biggest data-center markets, the new governor-elect campaigned on pausing new data-center construction. UBS analysts put a number on the risk: If construction pauses spread, they estimate that nearly a third of the new U.S. data-center capacity expected to come online in 2028 could be delayed or lost. For companies whose growth is contingent on the supply available to meet booming demand, that's a big deal. Perhaps the clearest example of how jumpy investors are is Viavi Solutions ( VIAV -13.67% ) , which crashed 18% the morning after it reported that quarterly revenue jumped 57% to $469.3 million, raised its outlook, and approved a $500 million stock buyback. The firm clearly delivered strong results, but the massive plunge shows the stock is trading on fear about the whole AI build-out rather than the business in particular. That could mean more pain if political news gets worse. But it can also mean the market is throwing out good companies along with the risky ones. For most investors, not all at once. The political risk is real but unsettled. Congress doesn't change hands until January, and any state-level pause would still have to be written and passed. Meanwhile, a 6% drop in Nvidia is a much smaller move than the double-digit losses in fiber makers or Wednesday's plunge in builders, a sign that investors are punishing the companies most exposed to new construction the hardest. Some see value already. Asset manager VanEck argues the sell-off has left Bitcoin miners oversold because their access to the power grid is scarce and commands a premium for AI customers looking for places to build. If you believe the AI build-out will keep going, a two-day plunge like this is the kind of moment long-term investors look for. The smarter move is to buy slowly, in pieces, and to favor companies with strong balance sheets and real customer contracts over the most speculative names. Just remember, these are among the most volatile AI stocks in the market right now. And if you'd rather avoid the political risk entirely, there are steadier ways to own tech stocks while Washington sorts this out.

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