On Thursday morning, U.S. equities experienced a dramatic reversal, shedding roughly $2 trillion in market value within the first hour of trading. The S&P 500 dropped 2.8% in the opening 30 minutes and later fell over 3%, marking its steepest intraday decline since April 2025. The sell‑off was led by semiconductor and AI‑related stocks after Democrats secured control of both chambers of Congress and captured several pivotal governorships, prompting investors to reassess the outlook for America’s AI data‑center expansion.

Political Shift Raises AI Policy Concerns

According to Cryptopolitan, the Democratic sweep gave the party influence over state policies that could affect the construction and operation of AI data centers. New governors in Texas, Georgia and Ohio have signaled intentions to pause or restrict new data‑center projects, citing potential impacts on electricity bills and utility costs. Texas, which is projected to host nearly 30% of U.S. data‑center capacity by 2028, could see higher power expenses and tighter permitting, factors that investors fear will curb demand for high‑performance AI chips. BeInCrypto echoed this narrative, noting that the governorship wins add a layer of regulatory risk beyond the federal legislative changes.

Chipmakers Bear the Brunt

The policy uncertainty translated into immediate price pressure on the sector’s biggest players. AMD shares tumbled roughly 12%–15% across the session, while Nvidia slipped between 6% and 8% after posting a modest decline. Broadcom fell about 6%, and the iShares Semiconductor ETF (SOXX) plunged 8%. Qualcomm experienced a near‑12% drop despite beating earnings estimates, as its outlook was deemed weak; the company also reported a 26% fall in handset‑chip revenue for the quarter, according to BeInCrypto. Other AI‑related hardware firms such as CoreWeave, Nebius and Iren saw declines ranging from 9% to 14%, underscoring the breadth of the sell‑off.

Broader Market Ripple Effects

The Nasdaq Composite slid 3.9%, pushing it more than 10% below its October peak and officially into correction territory. The Dow Jones Industrial Average fell 1,153 points, a 2.2% decline, while the broader market loss exceeded $2.3 trillion by mid‑morning, per Cryptopolitan. Commodity markets reacted as well: oil prices rebounded over 2% after a prior dip, while gold and silver futures surged to multi‑month highs, driven by a weaker dollar and falling Treasury yields. The CBOE Volatility Index rose to 22.59, reflecting heightened investor anxiety.

What to Watch Next

Analysts remain divided on the durability of the decline. Fundstrat’s Tom Lee described the reaction as a short‑term over‑adjustment, expecting states to continue courting AI investment under stricter terms. Conversely, market participants such as VanEck’s digital‑assets head Matthew Sigel warned that persistent doubts over AI spending could keep pressure on tech equities and spill over into crypto and the dollar. Upcoming data releases, including the October jobs report and further Treasury cash‑flow figures, will likely shape the next move for both equities and related crypto assets.