Chip stocks hammered as political shift raises AI infrastructure concerns
Yahoo Finance ·
Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Chip stocks plunged on Thursday, with Nvidia, Micron and AMD leading a sharp selloff that dragged the Nasdaq Composite down nearly 5% as investors reassessed the outlook for AI infrastructure spending and regulation. The Nasdaq fell 1,211 points, or 4.71%, putting it more than 10% below last month's record and into correction territory. The S&P 500 shed 245 points, or 3.19%, putting it on track for its worst session since April 2025, while the Dow Jones Industrial Average dropped 1,236 points, or 2.32%. More than $2 trillion was wiped from the US stock market within 50 minutes of the opening bell. Chipmakers bore the brunt of the selling. Nvidia Corp (NASDAQ:NVDA, XETRA:NVD) fell more than 6%, while Micron Technology Inc (NASDAQ:MU) dropped over 12% and Advanced Micro Devices Inc (NASDAQ:AMD, XETRA:AMD) lost more than 13%. The semiconductor index declined about 7%, while Broadcom Inc (NASDAQ:AVGO, XETRA:1YD) also fell 7%, Oracle Corp (NYSE:ORCL, XETRA:ORC) slipped close to 5% and Qualcomm Inc (NASDAQ:QCOM, XETRA:QCI) tumbled 9% after its outlook disappointed investors despite better-than-expected results. The selloff came as investors assessed what a Democratic sweep in the midterm elections could mean for AI infrastructure investment, particularly the construction of power-hungry data centers. Nigel Green, CEO of financial advisory group deVere Group, said the political shift was forcing markets to reconsider the costs and risks associated with the AI buildout. "Power, water, land and the cost of financing all of it via borrowing suddenly look less certain," Green said, adding that the repricing could take more than a few trading sessions. Democratic victories in the House and Senate, alongside key governorships, have raised concerns about potential restrictions on data center development and higher costs for electricity and water. Green said operators with heavy debt, thin margins and projects dependent on uncertain grid connections could face the greatest pressure. The rotation out of technology shares was accompanied by gains in defensive sectors, including healthcare, consumer staples and energy. Treasury prices also rose, pushing the 10-year yield down to 4.83%, while gold gained 0.9% to $4,098 an ounce. Green cautioned against treating the selloff as evidence that AI demand was disappearing, noting that companies with stronger balance sheets and established earnings could prove more resilient. However, he said volatility was likely to persist as investors reassessed the economics of AI investment and the potential impact of changing policies.
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