Nasdaq suffers worst day in 18 months on AI regulation fears

US stock markets took heavy losses on Thursday. According to The Guardian, the Nasdaq share index fell 5.5%, its steepest decline in 18 months, as investors worried that the artificial intelligence industry could face stricter rules after the midterm elections.

The Nasdaq composite slid into what analysts term a correction, a drop of more than a tenth from its latest peak. By the close of trading, more than $2tn had been wiped from its value. The decline was the largest single-session fall for the index since April 2025, when Donald Trump unveiled sweeping import duties he called liberation day tariffs.

Chip stocks lead the sell-off

Chipmakers and hardware firms were hit hardest. SanDisk, which makes memory chips, lost 22% of its value, and Western Digital, a hard drive producer, slid 17%.

Nvidia, a key chip supplier behind the AI boom, was the largest decliner on the Dow Jones industrial average, shedding 9.2%. The Dow ended the session at 51,868 points after shedding more than 1,800 points, or 3.4%. The S&P 500 was down 4.3%, and Goldman Sachs also declined, losing 3.7%.

Market nerves were visible in the VIX, Wall Street’s so-called fear index. It jumped 61% to its highest level since the early weeks of the Iran war, pointing to rising volatility.

Why investors are worried

Traders appeared to expect Democratic governors to limit new datacentre construction. The party secured several governor seats in this week’s contests, and voters in a number of local votes across the country also rejected datacentre projects.

Investors had braced for closer examination of datacentre plans, and the anxiety spread to markets worldwide. In Europe an early advance faded, leaving Britain’s FTSE 100 down 46 points, or 0.4%, at 10782.66.

The slump came after a strong session on Wednesday, when US shares posted their biggest daily gain in months. That advance reflected hopes that the Democrats’ midterm showing might limit the White House’s power. Trump used that day to again highlight record stock market highs on Truth Social.

Expert views on the outlook

Neil Wilson, investor strategist at Saxo UK, called the day a “complete capitulation-level event” for tech shares. He thought the sell-off looked excessive, but said markets first needed to steady.

Dan Ives, a tech analyst, said the election outcome signals slower datacentre growth ahead. He argued that Democratic control of the Senate would make it harder to pass AI and technology bills over the next two years.

Ted Parkhill, founder and CEO of Incline Investment Management, said investors were now assessing what AI shares are actually worth, rather than what the technology might become. He noted AI would likely transform the world over time, yet not every AI stock was fairly valued, so volatility would continue.

Frequently asked questions

Sources

• The Guardian: Nasdaq sees worst day in 18 months as investors bet on AI slowdown after Democrats’ election triumph

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