A single session erased most of the previous day’s postelection rally, pushing the Nasdaq Composite more than 10% below its recent record and into correction territory, the threshold defined as a decline of at least 10% from a recent high. The Dow Jones Industrial Average fell roughly 1,153 points, or about 2.2%, while the S&P 500 dropped about 2.8% and the Nasdaq shed about 3.9%.
The move reversed a sharp Wednesday advance, when the Dow gained more than 1,500 points and the S&P 500 and Nasdaq each rose more than 1% on initial postelection optimism.
Semiconductors Led the Decline
Chip stocks bore the heaviest losses, with the iShares Semiconductor ETF falling as much as 11% intraday in what may have been its worst session since March 2020.
Nvidia and Broadcom each fell about 6%, with Oracle also dropping sharply. The Philadelphia Semiconductor Index fell nearly 6% in early trading, extending a two-session slide, while the iShares Semiconductor ETF fell as much as 11% intraday, potentially its worst session since the March 2020 COVID-19 shock.
Neocloud companies, independent providers of AI-focused cloud computing infrastructure, absorbed some of the steepest losses. CoreWeave fell about 9%, Nebius about 13% and Iren about 14%.
Tesla dropped about 9%. Qualcomm fell about 11% despite reporting earnings that beat estimates, as its weaker-than-expected forward outlook drove investors out of the stock.
Election Results Sharpened an Existing Concern
Investors fear that Democratic congressional control could tighten AI regulation and slow data-center construction, reducing demand across the entire infrastructure supply chain.
Investors are worried that Democratic control of Congress, combined with key state-level victories, could produce stricter AI regulation and stronger permitting resistance for large data-center projects. That pressure would affect demand for GPUs, servers, networking equipment and power.
The election did not create the selloff on its own. AI and semiconductor stocks were already under pressure as investors questioned whether the scale of infrastructure spending could generate adequate returns.
Analysts Urge Caution on Forward Estimates
Market observers warn that the selloff could deepen if investors continue to challenge the aggressive profit forecasts built into AI-linked valuations.
Tim Holland, chief investment officer at Orion, said investors were stepping back to assess what the election results mean for the AI capital-expenditure cycle, which he described as a major economic tailwind of the past several years. The Macro Research Board warned that the shakeout could continue as investors challenge aggressive forward-profit estimates for AI-linked companies.
The firm recommended diversification away from technology and described the market as potentially undergoing a rotation beneath the headline index moves.
Nvidia’s Earnings Are Now the Most Important Data Point
Nvidia’s upcoming results and guidance will offer the clearest near-term read on whether hyperscalers, the largest cloud infrastructure operators such as Amazon, Microsoft and Google, are sustaining AI spending at the pace investors assumed.
Analysts expect Nvidia’s fiscal third-quarter results to show approximately $33.1 billion to $33.3 billion in revenue and about $0.75 in adjusted earnings per share. Its forward guidance will indicate whether demand for AI infrastructure remains intact.
Federal and state proposals on AI regulation, permitting and energy use will shape sentiment over a longer horizon. Semiconductor guidance will stay under scrutiny after Qualcomm showed how company-specific demand concerns can amplify sector-wide pressure.
The question investors cannot yet answer is whether the session’s move represents a temporary rotation out of crowded technology positions or the beginning of a deeper repricing of AI growth expectations.
