Wall Street Rout: Nasdaq Falls Into Correction on AI Regulation Fears

US stocks plunged on Thursday as investors worried that Democratic midterm victories could bring tighter regulation of artificial intelligence and data centres. The Dow fell 1,833 points, or 3.44 percent, the S&P 500 dropped 4.36 percent and the Nasdaq slid around 5.5 percent, closing at least ten percent below its October 6 record.

Chipmakers bore the brunt. Nvidia fell roughly 9.3 percent, the Philadelphia Semiconductor Index lost more than 12 percent, and Tesla dropped about 10.8 percent. Data-centre names IREN, Applied Digital and Nebius each tumbled over 14 percent, with GE Vernova and Constellation Energy also hit as rising electricity prices became a campaign issue.

Analysts were split. eToro's Jakub Rochlitz said markets now expect a slower and costlier AI build-out, while Argent Capital's Jed Ellerbroek called it a possible capitulation phase but said the moves look excessive. The rout marks the sharpest test yet of the AI trade that has driven markets for the past two years.