Chipmakers were hit hardest. The PHLX Semiconductor Index fell 12%, its steepest drop since March 2020. Nvidia ended the day down 9%, which took roughly $450 billion off its market value. Sandisk lost 22% and was the worst performer in the S&P 500. AMD, Western Digital, Seagate Technology and Micron Technology each lost at least 16%. Intel fell 10% after third-quarter earnings that disappointed, with weaker-than-expected revenue projections.

Across the S&P 500, about $3 trillion in market value disappeared, more than $1.5 trillion of it from chipmakers. The Nasdaq Composite finished nearly 12% below its October 6 record. It was Wall Street's worst trading day after a midterm election since 1896.

Analysts tied the selling to concern over the future of AI data center projects, which have drawn opposition from voters across party lines. Many midterm winners have pledged to restrict such projects, including through moratoriums on new buildouts. Nvidia, AMD and Micron supply the processors and memory that go into those data centers, a business that has driven their recent revenue growth. Tom Forte of Maxim Group noted that candidates ran on platforms concerned with electricity price inflation, which raises questions about future data-center expansion.

Kevin Cassidy of Rosenblatt Securities put it simply: "investors don't like uncertainty." Jeffrey Favuzza of Jefferies said there are "Many more questions than answers right now."

Daniel Ives of Yorkville Ives, an analyst known for bullish views, acknowledged that the AI buildout is now expected to be slower and longer, pointing to potential permitting and regulatory challenges in states like Texas. He said companies that can show tangible AI use cases and returns on investment are better positioned than those tied to infrastructure buildout.

Strategist Dave Sekera said the AI trade is being hit by several factors at once. One is a lack of evidence that companies are using AI to generate profits, which could leave commodity-oriented tech stocks overvalued.