Tech Stocks Rout as Post-Election Jitters Hit AI Expansion Plans
A broad tech selloff hammered Wall Street on Thursday as political shifts and growing financial pressures sparked fears of an impending slowdown in artificial intelligence infrastructure spending. The tech-heavy Nasdaq fell 5.5%, marking its sharpest single-day decline since April 2025.
Nvidia led the downward spiral, shedding nearly $450 billion in market value after its stock tumbled more than 9%. Qualcomm also dropped over 9% following a disappointing current-quarter earnings forecast. Double-digit percentage losses battered Advanced Micro Devices, Micron, and Applied Materials, while neocloud providers like CoreWeave extended their losses for a second straight day. Public companies associated with Elon Musk felt the sting as well, with shares of Tesla and SpaceX both falling by more than 9%.
Election Outcomes and Local Resistance
Wall Street’s retreat follows Tuesday’s midterm elections, which saw key states with major AI data center expansion plans turn blue. Democrats secured victories in gubernatorial and Senate races in Texas and Ohio, while Democratic Sen. Jon Ossoff won reelection alongside a Democratic gubernatorial victory in Georgia. Beyond statewide races, voters weighed in on 41 local ballot measures across 10 states designed to restrict data center construction. According to Ballotpedia and election data compiled Wednesday, voters approved data center restrictions in every location except Harwood, North Dakota.
Speaking at the Wall Street Journal Tech conference on Wednesday night, Meta President Dina Powell McCormick acknowledged that building data centers is “going to be harder” after the election results. However, she noted that one victorious governor reached out directly, saying, “As soon as we get past the inauguration, let’s meet because we don’t want to lose this investment in our town. We don’t want these jobs to go elsewhere.”
Supply Bottlenecks and Infrastructure Costs
Rising interest rates and massive capital demands are intensifying scrutiny on hyperscalers such as Meta, Alphabet, Amazon, and Microsoft, which have committed to annual infrastructure spending plans well over $100 billion. Meta recorded negative free cash flow in its latest quarter, joining Alphabet and Amazon, which hit negative free cash flow in the previous period. Shares of all four tech giants closed down between 2% and 4% on Thursday.
Operational bottlenecks continue to compound the pressure. A global memory shortage is pushing up prices for consumer devices and restricting component access. Intel saw its stock hit by a weak outlook caused by the shortage, despite reporting a 78% surge in data center revenue last week. Qualcomm CEO Cristiano Amon highlighted similar conditions after reporting $650 million in quarterly data center revenue, primarily from customization and connectivity. Amon noted, “We don’t have a demand issue; it’s a supply issue. If I had more supply, I would probably be doing better.”
Market analysts caution that Wall Street is increasingly evaluating whether tech firms can convert heavy infrastructure investments into sustainable profits. As Peter Boockvar, chief investment officer at OnePoint BFG Wealth Partners, observed during a CNBC interview, “The technology is still going to continue on in terms of its development. But if there’s a slowdown in the actual development and the buildings and the infrastructure and so forth, that’s what stocks are going to trade off.”
Portfolio manager Richard Clode of Janus Henderson also warned on CNBC’s “Squawk on the Street” that near-term turbulence is likely to persist, noting, “There’s going to be a knee-jerk reaction. And that could lead to some delays, and that’s going to be some concerns.”