Chip stocks posted their second-largest one-day fall on record on Thursday as investors sold semiconductor shares at a pace not seen since March 2020. The Philadelphia Semiconductor Index, a basket of 30 chip companies, plunged about 12 percent, with every member lower, and the Nasdaq Composite fell 5.52 percent to close in correction territory. The selling erased an estimated 2 trillion to 2.5 trillion dollars in market value across the Nasdaq, depending on the tally, and it wiped out the entire post midterm rally in a single session.
Why it matters
The individual losses were severe across the whole supply chain. Nvidia dropped about 9 percent to 181.60 dollars, AMD and Micron each lost roughly 17 percent, and SanDisk fell 22 percent. Broadcom lost 10.43 percent, Intel fell 10.33 percent, and Qualcomm dropped 9.49 percent after its phone chip sales fell 26 percent. Memory and storage names were hit hardest of all, with SanDisk, Micron, Western Digital and Seagate all extending losses that had begun earlier in the week. The VanEck Semiconductor ETF has now fallen 20 percent over the past month.
The trigger was a reassessment of the artificial intelligence buildout after the Democratic sweep in the midterm elections. A new Congress is expected to scrutinise data centre construction, semiconductor exports and energy use, and voters in at least 29 jurisdictions approved bans or restrictions on data centre building. Texas, Georgia and Ohio, which together hold nearly a third of the country operating and planned data centre capacity, all elected Democratic governors. A report by ICICI Bank said the election outcome could put 141 gigawatts of planned data centre capacity at greater risk of policy restrictions.
What happens next
Not everyone reads the selloff the same way. Goldman Sachs argued in a research note that tech giants may instead pull capital spending forward into 2027, rushing to build under current approval conditions before new policies take effect. Morgan Stanley expects United States business investment to rise about 7 percent year on year in the fourth quarter of 2026 and 8 percent in 2027, with artificial intelligence related spending a major part. The disagreement is really about timing: whether regulation slows the build, or accelerates it by creating a deadline that companies race to beat.
For investors, the practical question is now selectivity. AMD results this week showed demand is still strong, with data centre sales nearly doubling, and the company forecast sales growth of 80 percent in 2027. But the market is asking a harder question: strong for whom, under what rules, and at what cost in power, permits and politics. The gap between companies with real data centre revenue and those with only promises is widening fast, and Thursday showed that in a falling market, promises are the first thing investors sell.
