Stocks plunge as midterm results send AI trade into a tailspin

By Elisabeth Buchwald, John Towfighi, Matt Egan, CNN

(CNN) — The tech-heavy Nasdaq Composite plunged by as much as 5.5% Thursday as investors weighed whether Democrats’ gains in the midterm elections could lead to a slowdown in the massive data center buildout.

The Nasdaq dipped into correction territory, trading down more than 10% from its record high on October 6 and on pace for the worst day in five months. It’s a sharp reversal after Wednesday’s historic post-midterm rally with the Nasdaq gaining 1.44%.

While the Nasdaq rose Wednesday, underneath the surface, shares of semiconductor chipmakers and companies involved in the AI data center buildout were falling. That selling pressure intensified on Thursday, dragging the index down sharply.

Shares of chipmakers and the “picks and shovels” of the data center buildout and AI boom are selling off as investors mull the implications of Democrats winning races in states like Texas that are hubs for planned data centers.

The Nasdaq has been on a rollercoaster this year: The tech-heavy index closed in correction in March, rallied back to record highs in early June, stumbled and nearly fell into correction in late July, then reclaimed record highs in September and October — before sliding into correction territory again on Thursday.

This is a developing story and will be updated.

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