Two days, two directions: why chip stocks broke as markets digested the midterms

What happened

On Wednesday, 4 November, the Dow rose 3.0% and the S&P 500 1.6% after Democrats won control of both the House and the Senate in the midterm elections. Chip stocks did not join the rally: the Nasdaq-100 rose only 0.9%, held back by semiconductors.

On Thursday the selling spread to the whole market. The Nasdaq Composite fell about 5.5% to roughly 24,315, more than 10% below its 6 October record close — a technical correction. The S&P 500 lost 4.3%, the Dow 3.7% (about 1,840 points) and the Russell 2000 4.4%. The Dow gave back almost all of Wednesday's gain.

Where it hurt most

The damage was concentrated in the AI infrastructure layer. Nvidia fell about 9% to roughly $182, below its end-2025 close, erasing its 2026 gain. Broadcom fell about 10%. AMD and Micron fell about 17%. Intel fell 10.3%. Qualcomm lost about 9.5% even though its results beat estimates, after a weaker outlook for smartphone chips. The iShares Semiconductor ETF was down more than 10% intraday, on course for its worst day since March 2020.

Data-centre names fell with them: the neocloud CoreWeave lost 11%, Nebius and IREN 16%, and server maker Dell and power suppliers to data centres also traded lower. By the afternoon all 11 S&P 500 sectors were down.

Why

Investors fear that the new balance of power in Washington and in several state governments could slow the data-centre buildout, through tougher permitting, power or AI rules. Senator Bernie Sanders, who caucuses with Democrats, has called for a national data-centre moratorium. How much of that becomes policy is unknown; markets sold first and will ask questions later. AMD chief executive Lisa Su called the reaction short-sighted and said she sees no slowdown in AI chip demand.

What has not changed

The industry's reported numbers are the same as last week. Global chip sales reached $517.7B in Q3 2026, up 24.1% on the quarter (SIA). TSMC's Q3 revenue rose 50.9% from a year earlier. Thursday was a repricing of political and regulatory risk, not a change in reported demand.

What to watch

1. Concrete proposals — not rhetoric — on data-centre permitting and power at federal and state level.

2. Hyperscaler capex guidance: any cut would matter far more than political headlines.

3. NVIDIA's Q3 results later this month, the first big read on AI demand after the election.