The Nasdaq share index suffered its worst day in 18 months on Thursday after slumping 5.5 percent. Investors grew worried that the artificial intelligence industry will face tougher regulations following recent midterm election results.
As Wall Street sustained widespread losses, the tech-heavy index tumbled into correction territory. This leaves the exchange more than 10 percent below its recent record high, with more than $2 trillion shaved off its value by the end of trading.
The drop marked the biggest one-day fall for the index since April 2025. Chip stocks led the slump across the market.
Memory maker SanDisk tumbled by up to 22 percent during the session. Hard drive maker Western Digital fell by 17 percent.
Wall Street’s fear index, known as the VIX, jumped by 61 percent. Analysts noted this reached the highest levels seen since the early weeks of the Iran war, pointing to rising market volatility.
The heavy falls continued across Asia on Friday. Japan’s Nikkei 225 index sank 6 percent, while South Korea’s Kospi index tumbled more than 8 percent in early trading.
Analysts pointed to expectations that Democratic governors will clamp down on the rollout of new datacentres after the party won a series of gubernatorial races. US voters also rejected datacentres in a series of local ballots across the country.
Neil Wilson, investor strategist at Saxo UK, said a complete capitulation-level event was playing out in tech stocks. The fear is a total momentum unwind as Democrats pace the frontier and kibosh datacentre buildout, Wilson said, adding that the sell-off looked overdone.
The Dow Jones industrial average of 30 large US companies dropped more than 1,800 points, or 3.4 percent, to finish at 51,868 points. The S&P 500 declined by 4.3 percent.
Nvidia, the chipmaker at the heart of the artificial intelligence boom, was the top faller on the Dow Jones index, down 9.2 percent. Goldman Sachs followed with a 3.7 percent drop.
Tech analyst Dan Ives warned that the midterm results signal a slowdown in the pace of datacentre construction. Ives noted that Democrats taking control, especially over the Senate, will create major hurdles for artificial intelligence and tech legislation over the next two years.
Ted Parkhill, founder and chief executive of Incline Investment Management, said the market is moving from the promise of artificial intelligence to the price of artificial intelligence. Parkhill noted that while the technology will be transformative in the long run, not every related stock is currently priced appropriately and turmoil lies ahead.
