Wall Street experienced a sharp sell-off on Thursday, with AI-related stocks leading the decline. The S&P 500 plummeted 4.4%, marking its worst day since April 2025 when President Donald Trump introduced 'Liberation Day' tariffs. The Dow Jones Industrial Average dropped 3.4%, while the Nasdaq Composite tumbled 5.5%, falling 11.9% below its all-time high set last month.
The downturn was driven by concerns over potential moratoriums on AI data centre construction following Democratic victories in the U.S. midterm elections. Voters across political lines have expressed apprehension about AI and its impact on power bills. A slowdown in data centre construction could reduce demand for AI chips, electricity, and other related services, which have been key drivers of the U.S. economy's growth.
Major AI chip companies took significant hits. Nvidia, a leader in the AI boom, fell 9.3%, while Advanced Micro Devices tumbled 17.3%. CoreWeave, which rents AI chips, dropped 9.8%, and GE Vernova, a data centre power provider, sank 7.5%. The broad losses erased the previous day's gains, which had been the best in three months.
Among the few winners, AppLovin surged 31% after reporting strong revenue and profit, and announcing a $3.6 billion stock buyback program. Tapestry, behind brands like Coach and Kate Spade, rallied 7.1% after exceeding profit expectations and raising its revenue forecasts. In other markets, Brent crude oil rebounded 3.9% after a sharp drop, while Treasury yields fell to 4.84% from 4.90%.