Major semiconductor companies experienced significant declines as investor sentiment shifted regarding artificial intelligence infrastructure spending. Nvidia and Qualcomm each fell more than 9%, with Nvidia losing approximately $450 billion in market capitalization. The Nasdaq composite declined 5.5%, marking its steepest drop in 19 months dating back to April 2025.
The selloff reflected growing concerns about the sustainability of the AI buildout following this week’s midterm election results. Voters in states with major data center development plans elected Democratic candidates, and ballot measures restricting data center construction passed in nearly all cases except one measure in Harwood, North Dakota. Meta’s president indicated that regulatory hurdles would make data center construction more challenging going forward. The combination of elevated interest rates, substantial capital requirements, and perceived shifts in political priorities fueled worries that companies would struggle to generate sufficient revenue relative to their debt obligations.
Other semiconductor manufacturers also suffered steep losses, with Advanced Micro Devices, Micron, and Applied Materials declining by double-digit percentages. Hyperscaler technology companies including Alphabet, Amazon, Microsoft, and Meta experienced more modest declines between 2% and 4%. Despite robust reported growth in data center divisions, with Intel reporting a 78% increase in data center revenue and AMD noting more than doubled sales in that segment, investors expressed skepticism about the long-term viability of such expansion.
Chipmakers faced additional headwinds from a global memory shortage that elevated component prices and complicated supply chains. Qualcomm reported $650 million in data center revenue during the period, though executives acknowledged supply constraints rather than demand weakness. Industry analysts cautioned that market uncertainty could lead to project delays and cautioned that resolution of investor concerns remained distant.
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